Preparing for a Perfect Storm

The global economy this year will exhibit some similarities with the conditions that prevailed in 2012. No surprise there: We face another year in which global growth will average about 3 percent, but with a multispeed recovery—a subpar, below-trend annual rate of 1 percent in the advanced economies, and close-to-trend rates of 5 percent in […]

GCC: How to Create Jobs for Nationals?

The GCC is growing, helped by crude production and expansionary policies. Despite the sluggish global outlook, the Eurozone recession, and Asia’s deceleration, the six Gulf Cooperation Council (GCC) countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates – are growing the fastest in the Middle East and North Africa (MENA) region […]

Forgetting History: Value Creation & Tax Burdens

“Taxes are the price we pay for a civilized society.” -Associate Justice of US Supreme Court (1902-1932) Following last week’s Phil Mickelson discussion, I received lots of emails and comments from financial advisers, accountants and lawyers. A recurring theme was an ongoing, almost resigned surprise amongst the professional set that people are still unaware of the many […]

US GDP Shrinks in Q4. How to Interpret the Bad News?

Data released today by the Bureau of Economic Analysis showed a decrease of 0.1 percent in U.S. real GDP for the fourth quarter of 2012. If confirmed, that would mark the first quarterly drop in real GDP since the recession ended in mid-2009. Of course, we should always take the advance estimate of GDP with […]

US GDP Poor, but Weakness Exaggerated

News that the US economy contracted in Q4 for the first time since the recession ended is a shock.   However, the 0.1% contraction (annualized) is an exaggeration of the economy’s weakness. A confluence of factors took a toll.  The preliminary estimate is that inventories took 1.35% off GDP.  Also with an incomplete information set, the […]

The Most Common Error in Stock Market Research

There is a very common research mistake. It is pervasive in Wall Street research, even that presented by the big-name firms. My academic friends are not immune, partly because they have their own set of incentives. My mission in this post is fourfold: Explain the problem in a way that it can be readily understood; […]

Currency Wars in the Era of Unconventional Monetary Policies

Interpreting Monetary Policy’s Impact on Exchange Rates (and Economic Activity) Over a week ago, Bundesbank President Jen Weidmann warned against the politicization of Japanese monetary policy, as the BoJ was pressured for more expansionary policy. [1] Nouriel Roubini warned that a currency war could be self-defeating as each country’s laxer monetary policy merely resulted in higher commodity […]

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