Ray Dalio runs the worlds largest hedge fund – the Alpha Fund with more than $169bn in assets, he has been crowned one of the worlds most successful investors of all time, founding Bridgewater Associates in 1975. Here is his take on how the economy works – he’s worth listening to!
For the UK economy I think the phrase was spot on from the chief economist of the Bank of England, Andy Haldane, when he described it as being in a position of both agony and ecstasy. For the ecstasy we now have an economy that is currently growing faster than any other developed economy on the globe. A rate of 3.1% for this year is expected and that for the UK is quite a pace, although obviously nowhere near the dynamic rates of the developing nations. In fact for the UK’s it could be described as running quite hot – especially when you consider not just the QE money pumped into it but the £22.2bn plus set aside for consumers’ claims from the PPI scandals. Whilst growth next year will likely ease to 2.4% according to the EY Item Club, this is hardly agony, although ecstasy would not be a sensible description either. Reasonable is more truthful, although sustainable would be better. (more…)
The World Bank recently stated that the US economy will soon be surpassed by the Chinese however, such measures are quite illusory. They work on the basis of ‘purchasing power parity’ which is not a wildly efficient measure. However strongly China’s GDP is growing and even if it does surpass that of the US, the two economies are very different in structure and economic sophistication. For example, China’s per capita income, which is a much more accurate measure of economic development, comes out as only 20% of America’s and probably only slightly ahead of that of, say, Jamaica. That is a huge difference and it will take many decades to close that chasm. (more…)
A 1964 Morris Traveller is entitled to have the occasional flashing light on her vintage dashboard. Sometimes it will quite rightly be a warning of some potential mechanical failing in this wonderfully mature motorcar, but equally with an ageing electrical system she also has the habit of producing some odd signals from time to time. So it takes some experience to work out whether it really is an electrical problem or whether she is having a hissy fit. (more…)
Deflation is a general decline in prices. For anyone who has been struggling to make ends meet that may not sound all bad. In fact, it’s not always bad. According to the Federal Reserve Bank of St. Louis, between 1876 and 1879, prices in the United States fell by about 5 percent per year, on average, while the economy grew at a 7.6 percent clip.
The UK is often considered to have been the hardest hit during this period, losing some of its large industrial lead over the economies of Continental Europe. The average rate of growth grew at just 1.75-2.25 percent, reflecting the growing pace of industrialisation and technological progress. (more…)
After a week that left investors wondering what’s next – much like fishermen on a lake as the wind kicks up and the water gets choppy – the wind settled and the fish started biting. U.S. stock markets posted their best weekly returns in almost two years last week. When all was said and done, investors were $900 billion richer on paper, according to experts cited by Barron’s. (more…)
It’s a little early for Halloween, but markets sure got spooked last week. After a 28-month ride to September highs, stock markets jolted and shook investors last week like the most dramatic and scream-inducing rollercoaster at an amusement park’s fright night. (more…)
So here we are, still faced with a huge deficit, and although it has come down over the past few years, it is now showing signs of flat-lining and even rising slightly. The Tories claim they have the answer, and I expect Mr Milliband says the same although he just forgot to mention it, and we await somewhat wearily the views of the others. So are we stuck in a funk and unable to retrieve the situation and just doomed to be sucked into the Slough of Despond?
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It’s déjà vu all over again!
Last year, pundits and analysts tried to discern when the Federal Reserve might begin to end quantitative easing by reading economic tea leaves. For months, bad economic news proved to be good news for stock markets. This year, investors are seeking signs which might indicate when the Fed will begin to raise interest rates and, once again, bad news has become good news. Last week’s weaker-than-expected unemployment report helped push U.S. stock markets higher, according to Reuters, because it was interpreted to mean the Fed would not raise rates soon. (more…)
What do Harry S. Truman and Hindu goddesses have in common? Both were invoked to describe the U.S Federal Reserve Chairwoman Janet Yellen’s speech at the Jackson Hole Economic Policy Symposium last week. (more…)
