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.
John Mauldin, Editor
Outside the Box
The Missing Link to Global Rebalancing
Financial markets are giddy over the prospects that a $51 trillion global economy has once again displayed Teflon-like resilience in coping with a major problem. There are signs that a benign global rebalancing could well be at hand. A downshift in the US economy has been largely offset by improved economic conditions in Europe and Japan. Meanwhile, the dollar has resumed…