A Subprime Outlook for the Global Economy
October 22, 2007
Stephen Roach is one of my favorite analysts. However, since he moved to Asia to take up new responsibilities, he has not written as much. Thus I was delighted to receive what will be today's Outside the Box last week. Roach argues that the US is getting ready for a subprime economy and the world, and in particular Asia, will also slow as a result. This is a particularly sobering essay, but one that should be read.
Stephen S. Roach is Chairman of Morgan Stanley Asia, serving as the Firm's senior representative to clients, governments, and regulators across the region. Prior to his appointment as Asia Chairman, Mr. Roach was Morgan Stanley's Chief Economist.
I trust you will fine this Outside the Box stimulating.
The Missing Link to Global Rebalancing
April 23, 2007
Over the past couple of years, I've written quite a bit about how the global economy has taken shape and why it is important to understand it when building one's investment portfolio. There have been many market pundits saying that the global economy is out of balance with each individual having some sort of variable solution, whether it be the currency markets, trade relations or productivity growth. Morgan Stanley's Chief Economist, Stephen Roach, has written an excellent article on the subject, one definitely worthy of this week's "Outside the Box."
In his article "The Missing Link to Global Rebalancing," Roach contradicts the widespread notion that the US Dollar is the primary driver for rebalancing and explains why personal consumption is the issue to keep an eye on. For those of you unfamiliar with Roach, I always find his musings and analysis to be very forward thinking in nature, regardless if our views completely align.
I trust that you will enjoy his commentary and find it valuable to your investment acumen.
Global Transitions
December 11, 2006
With a new year just weeks away, investors are weighing expectations and asking questions about what lies ahead. Each year presents its own set of opportunities and challenges, especially in are ever-increasing global economy. Today's "Outside the Box" features a letter by Stephen Roach on the impending transitions of this interconnected marketplace.
Stephen S. Roach is Managing Director and Chief Economist of Morgan Stanley, and is widely recognized as one of Wall Street's most influential economists. His published research has covered a broad range of topics, with recent emphasis on globalization, the emergence of China, productivity, and the capital market implications of global imbalances. In his letter "Global Transitions," Roach analyzes the sources of past growth amidst the backdrop of a global economy and highlights the forthcoming changes on where to expect it from next. In addition, he addresses the growing "consensus" of the soft-landing scenario for U.S. housing.
On a side note, Roach mentions a companion piece by his normally bullish colleague, Richard Berner. In "It's a 'Growth Recession,' Not a Lasting Downturn," Richard not only forecasts lower growth but also lower profits. To view the article, click here and then scroll down.
I hope these articles help to form your investment outlook from a global viewpoint...enjoy. For what it's worth, I will be on CNBC at 7:45 this Tuesday morning talking about hedge funds.
Commodities as an Asset Class
September 18, 2006
A couple weeks ago in my "Thoughts from the Frontline" Friday E-Letter, I wrote about Mr. Market and potential bubbles (you can view the letter here). Well one particular asset class, commodities, has had me thinking as of late. Despite sound fundamentals initiating the recent boom in the commodities markets, much speculation has also been exerted as evidenced by the resulting volatility in the sector. Stephen Roach has recently weighed in with his take on the situation which I believe will serve well for toady's "Outside the Box."
Stephen S. Roach is Managing Director and Chief Economist of Morgan Stanley, a leading global financial services firm. He has been widely recognized as one of Wall Street's most influential economists. His published research has covered a broad range of topics, with recent emphasis on globalization, the emergence of China, productivity, and the capital market implications of global imbalances. In his article "Commodities as an Asset Class," Mr. Roach questions the recent popularity of commodities as institutional investors around the globe have sharply adjusted their asset allocation strategies to reflect the sector. In so doing, he points out how much of the "bubble-like" qualities prevalent amongst the equities markets may now be exposed to the commodities markets as well.
I have been involved with commodity funds and managers for almost 20 years, and have seen a lot of fads come and go. I am a big fan of well researched traders and funds who have figured out how to find an edge. That edge is going to increasingly be important if you are going to thrive in the commodity world. Long only portfolios are going to be subject to increased volatility and quick movements, both up and down. You need to think carefully about your exposure in these markets.
This commentary should be read with an objective mind in the midst of vulnerable market conditions. I hope that you will find it to be "outside the box" thinking.