Category Archive

the worries of today’s deficit hawks sound eerily reminiscent of Roosevelt in 1936 and 1937
—Alan Blinder in the NYT

I’m advocating 6 percent inflation for at least a couple of years. It would ameliorate the debt bomb and help us work through the deleveraging process…There’s trillions of dollars of debt, in mortgage debt, consumer debt, government debt. It’s a question of how do you achieve the deleveraging. Do you go through a long period of slow growth, high savings and many legal problems or do you accept higher inflation?
—Kenneth Rogoff, Harvard

Anybody who has been a central banker wouldn’t want to see inflation expectations become unhinged. The Fed would have to create a recession to get its credibility back.
—Marvin Goodfriend, former official at the Federal Reserve Bank of Richmond, professor at Carnegie Mellon University’s Tepper School of Business

The basic advantage of pushing inflation a little higher is that it would make it less likely that we run into the problem of the interest rate hitting zero and the Fed not being able to stimulate the economy if necessary.
—Laurence Ball, Johns Hopkins

A country that continuously expands its debt as a percentage of GDP and raises much of the money abroad to finance that, it’s going to inflate its way out of the burden of that debt. That becomes a tax on everybody that has fixed- dollar investments.
—Warren Buffet, May 4 CNBC interview

The world will not just bounce back to where it was. We continue to believe that economic recovery will be a long process.
—Daniel Och in a recent investor letter

Economic numbers, housing data, earnings, risk appetite and credit have all gotten less bad. The question is, for how long?
—Dmitri Balyasny, CIO of Balyasny Asset Management, $1.6b AUM

Proclivity
Social Graph Symposium

The sector had just gotten stupidly cheap. And on any kind of loss-adjusted basis, stuff is still really cheap. If you didn’t know about the last few months, you’d never know how it’s gotten here. You can run some pretty draconian scenarios and get awfully high yields still.

You’ve seen some healing, you’ve seen risk-taking come back, you’ve seen balance sheets improve. Just the fact that stock markets are up as much as they are, you’ve recreated a tremendous amount of equity in the world, so I think you’ve started to see people in a position where they can actually put funds to work.
—Scott Simon of Pimco

It’s a more constructive market. What we saw last week was only a necessary pause, not the beginning of a retracement. The worst of the economy is behind us and it’s hard to see earnings getting any worse from here.
—Hank Smith, who helps oversee $5 billion as chief investment officer of Haverford Trust Co. in Radnor, Pennsylvania

While profit shrank 37 percent from a year earlier at the 445 companies in the S&P 500 that reported quarterly results since April 7, Bloomberg data show they beat analysts’ estimates by an average of 9.3 percent.
—Bloomberg

roughly 420m Indian voters have produced the best possible outcome for India in the largest election of world history.
—FT: Ashutosh Varshney, Professor at Brown University

Markets are euphoric. The focus by federal and state governments on development will lead to a structural re-rating of India. We needed a stable government especially in the context of the global environment, which is still challenging. We need the government to kick-start the economy.
—Rahul Chadha, Hong Kong- based head of Indian equities at Mirae Asset Global Investment, $46b AUM

The election result is extremely positive and very, very bullish.This will provide a government which is stable and has powers to take decisions. Bull markets are back, unless we see complete chaos in global markets. India will outperform over the next one to three years.
—Madhusudan Kela, head of equities at Mumbai-based Reliance Capital Asset Management, the nation’s largest money manager, with $18b AUM

will hold for some while, but then the question will be what does the government do. [The overwhelming victory] has suddenly made people build into valuations a possible structural reform in all sorts of different sectors.
—Nicholas Field, a London-based emerging-markets money manager who helps oversee about $12 billion at Schroders Plc

::Bloomberg on India’s stock market, following the election

We can form the government without the Left. We’re not looking at the Communists at the moment…they do carry an ideological baggage and sometimes that is a problem, which is a deterrent to economic reforms. Of course, if we have to do business with them, then we will have to negotiate with them the terms of business. They left. We did not throw them out.
—Kamal Nath, Indian Trade Minister, May 15

I don’t think Congress will make the mistake of wanting to form a government with the Left again unless all other strategies have been exhausted.
—Prem Shankar Jha, an independent political analyst and former aide to former prime minister Vishwanath Pratap Singh

This is an absolute game changer. It can truly move India in a much faster pace to where it deserves to be in the global economy. There were so many major initiatives that were sidelined. It will have a phenomenal boost on the Indian economy this year and next.
—William Nobrega, the co-author of ‘Riding The Indian Tiger’

This is good for India and good for the world.
—Rahul Bajaj, chairman of Pune-based Bajaj Auto

We’re going to be looking at everything in the light of the current economic recession worldwide. [policies that] generate employment and that do not displace people. [government is not bringing any] unfinished reform agenda [into its new term]
—Kamal Nath in the WSJ, May 18

We will have to be cautious about financial sector reforms. Some of the icons of the financial world who were advocating financial reforms have closed shop. We have to be cautious this time…With the global economy in recession and the western economies in disarray, India has to focus on a domestic demand and domestic investment driven economy. We believe that it is even more important to conclude the Doha round as one of the measures to extricate the global economy from going into a tailspin and India is willing to play a leadership role in this.
—Kamal Nath’s interview from Reuters

We will take the reforms agenda forward, but not at the cost of development and not at the cost of state firms
—Congress leader Prithviraj Chauhan

There’s a real sense of urgency in taking this event and translating it into tangible results. If we don’t see some positive signs on an improving fiscal deficit in relatively short order, we could end up again with a weaker equity market, a weaker rupee and reduced confidence in the government’s ability.
—Nick Chamie, global head of emerging-markets research at RBC Capital Markets in Toronto

They’ll have a honeymoon of six to eight months. As long as they’re delivering on some of the expectations, the markets will hold the gains. They have to make the right start.
—John Praveen, chief investment strategist at Pramerica International Investments Advisers, a unit of Prudential Financial Inc. in Newark, New Jersey

Among the key reforms will be disinvestment now – the new government will focus on fiscal responsibility. The key issue will be for the government to balance the need for additional fiscal stimulus with a credible plan for fiscal consolidation.
—Rajeev Malik, an economist at Macquarie Group Ltd. in Singapore

Now the Congress party can rule with a minimum number of coalition partners and with a mandate for reform. This is exceptionally good news for India.
—Rory Medcalf, an India specialist at the Lowy Institute for International Policy in Sydney

Maybe we won’t agree on abortion, but we can still agree that this heart-wrenching decision for any woman is not made casually. It has both moral and spiritual dimension.
—Obama at Notre Dame

The rise of the casual entrepreneur and the pursuit of the unconventional

People think entrepreneurs are risk-loving. Really what you find is successful entrepreneurs hate risk, because the founding of the enterprise is already so risky that what they do is take their early resources, the small amounts of capital that they have, whatever assets they have, and they deploy those resources systematically, eliminating the largest risk first, the second-largest risk, and so on, and so on.
—Jeff Bezos

The belief now is that the world is not so American- centric anymore. It’s going to be driven more and more by the Chinese economy and consumer so might as well load up more on Chinese banks than American banks.
—Melvyn Teo, associate professor of finance at the Singapore Management University

We have also been re-assessing our long term portfolio balance over the last two years. As Asia continues to develop, it continues to de-risk. We are increasingly more confident of Asia’s future.
—Ho Ching, CEO Temasek, said in a speech on 12 May. She went on to explain that Temasek would cut their OECD holding to 20% and expand exposure to Russia, Latin America and Africa. The consequence, however, is a rebalance away from Asia, as well, which at >40% is higher than their current allocation

We’ve been very heavily overweight in Asia for some years now and leery of the Western financial institutions because Asia is where the growth is at.
—Hugh Young, managing director at Aberdeen