Numerous, famous economic and investment professional thought leaders presented. We summarize their presentations below:
Laksham Achuthan, Co-Founder of ECRI, Business Cycle Forecasting: Because GDP growth is so subdued (1.6% per year since 2000), the likelihood of more frequent but less severe recessions is higher. Until the velocity of money expands from historically low levels, economic expansion could stall in the U.S.
David Hale, formerly chief economist of Kemper and Zurich Financial Services: The world economies have entered a phase of unprecedented global interdependence. Because of Japan’s recent policies, he is excited about Japan for the first time in 20 years. The U.S. will face fiscal policy drag, Italy will be an uncertainty driver in Europe and China will continue to grow at 7-8% as their middle class increases in size; although this will be tempered by decreasing real estate values.
Thomas Coleman, Executive Director of Research in Economics at the University of Chicago: Risk management is a people process and should be focused on compensation and incentives. You control risk by measuring volatility, value at risk and a particular investment’s contribution to risk. Risk cannot be eliminated, only managed.
David Rosenberg, formerly chief economist at Bank of America-Merrill Lynch: The U.S. output gap is currently at -5.7%, indicating significant spare capacity for economic expansion. The bubbles over the past decade are all debt related with the current bubble in government debt as it relates to GDP. The S&P 500 stock index has a .87 correlation to the Federal Reserve Balance Sheet.
Joseph Scoby, formerly Chief Risk Officer for UBS and Managing Director with O’Connor and Associates: The risk paradigm is simply stated as the possibility of actual economic or opportunity loss. The possibility of loss is directly related to the complexity of the transaction or investment. There are 12 risk factors to consider, not the least of which is an individual’s behavioral bias.