Defining Emerging Markets
Emerging markets are not poor countries, nor are they countries which are making economic progress. They are defined by a very specific set of macroeconomic properties, which financial markets are conscious of,...
An intellectual virus, a bubble, or both?
The recent phase of market volatility precipitated by the February 2018 ‘flash crash’ has morphed into fears of a growth slowdown, phoney Trumpian trade wars, and real wars. But the initial crash itself may be ...
r* and the range of irrelevance
Despite the fact that interest rates determine all asset valuations, there is nothing close to a general theory of interest rate determination. The rule of thumb when I started working in financial markets was ...
Safe asset issuance & the discovery of oil
(with guest author, Tristan Hanson)
Last month, we made a proposal for a sovereign wealth fund (‘SWF’). It triggered a substantial debate. How would it operate in practice? Are we trying to fund investment o...
When big data is worse than a sample of none
Michael Mauboussin uses a very simple exercise to illustrate how difficult it is to statistically distinguish skill from luck. Investors are often deemed geniuses or fools based on small samples. Think of those...
Why do asset prices move?
Discussions of volatility tend to reveal eccentric views of asset price determination. 'Uncertainty' is deemed to increase and decrease with remarkable frequency. This is particularly odd given that what we don...
Has the Bank of Japan solved the ‘Piketty problem’?
Japan’s unlikely re-distribution
Why is the Bank of Japan (BoJ) trying to raise the rate of inflation? Taking account of its demographic profile, Japan's economic performance has been impressive by developed w...
There is no shortage of safe assets – a short proof
Safe assets are bunds, treasuries, gilts, JGBs and other government bonds issued by large developed economies. In one sense, they actually are ‘safe’ assets. They are typically negatively correlated with risk a...
Fiscal policy: a brief reply to Duncan Weldon
Duncan Weldon has written a very perceptive blog, arguing that helicopter money is ‘a solution in search of a problem’ - what we really need is effective fiscal policy. In one sense, Duncan is spot on. A smart ...
Is it permanent? A reply to Nick Rowe
Nick Rowe has written a typically-lucid note which makes clear why it might make a difference to consumer behaviour if a tax cut is permanent, or temporary. To this extent, we are in full agreement: giving some...