Chinese GDP data surprises, in line with expectations…..

Chinese third quarter GDP data surprised everyone, coming out right in line with market expectations. The economy grew by an annual rate of 6.7% in the third quarter, providing comfort that Chinese authorities have steadied the ship. The central planners remain committed to their official growth range of 6.5% to 7% but at what cost? Read More

Boring pensions and the corporate mindset

I_Borg_Star_Trek_TNG_HD

Speaking last week at the annual conference for the Pension and Lifetime Savings Association, Sir Lenny Henry provided some sensible advice on how the pensions industry can communicate better with members.

Humour.

In a segment entitled, “CAN SHAKESPEARE HELP BRITAIN SAVE?”, the comedian said “Humour is a key element to everything we do” and “should be used to engage effectively with millennials to boost saving”.

“People remember things when they are funny because it engages with the brain”.

I think Lenny Henry is on the money. The pension industry is stiffly boring and the way the subject is communicated is simply a reflection of that. Read More

The Liverpool v United Rivalry

MANCHESTER, ENGLAND - Saturday, March 14, 2009: We've won it five times... Liverpool's Fernando Torres reminds fans of his club's European pedigree as he celebrates scoring the equalising goal against Manchester United during the Premiership match at Old Trafford. (Photo by David Rawcliffe/Propaganda)
“MANCHESTER, ENGLAND – Saturday, March 14, 2009: We’ve won it five times… Liverpool’s Fernando Torres reminds fans of his club’s European pedigree as he celebrates scoring the equalising goal against Manchester United during the Premiership match at Old Trafford. (Photo by David Rawcliffe/Propaganda)”

Mario Draghi’s press conference on Thursday is just white noise, the real event of the week is Monday night football at Anfield, home of Liverpool FC, when the Pool take on bitter rivals Manchester United.

Maybe it was the excitement of the clash, or the inspirational Bill Shankly videos I stayed up watching, but I was in the gym before my alarm even went this morning. The result could be make or break for how this week goes; for any clients meeting me this week, beware my enthusiasm may be impacted by the result tonight.

There are few bigger rivalries than this one. A reported 700 million people from around the world will tune in to see the game. I don’t think it matters what country these fans are from, true Liverpool fans hate Manchester United, and likewise United fans hate Liverpool. Read More

Annual budget sideshow is just a distraction

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“The difficulty lies not so much in developing new ideas as in escaping from old ones.”   – John Maynard Keynes

Another year, another budget! This time every year in Ireland the focus moves to the budget announcement of the Irish government. We are forced to suffer through weeks of media speculation on hypothetical scenarios, biased rhetoric from the various lobby groups, and a fresh dose of political jostling to influence voters.

In my mind, the attention payed to the annual budget is an exercise in wasted energy and a perpetuation of the short termism mindset that drives the behaviour of stakeholders in the economy.

For all the fanfare leading up to budget day, the decisions announced every year are typically at the margins. Do not expect any ground breaking announcements in terms of setting a long term vision for Irish society. Read More

Economic Growth and Asset Prices…..

Bubble

The OECD released their latest Interim Economic Outlook, warning that “the global economy is projected to grow at a slower pace this year than in 2015, with only a modest uptick expected in 2017”. This is another case of groundhog day, for years now these institutions begin the year with overly optimistic growth forecasts which are later revised lower.

One might expect equity markets to be rattled by this phenomenon, surely at some point lower economic growth must be reflected in valuations? What we have seen is that the weaker economic outlook has been justification for the world’s major central bankers to continually loosen monetary policy. This has in turn pushed bond yields to record lows and risk assets like equity and property – now priced off much lower discount rates – ever higher.

Should we be concerned by the fact that risk assets have continued to move higher while global economic growth has continually fallen short of expectations? Have the world’s central banks stumbled upon a new form of alchemy where valuations have no link to Gross Domestic Product (GDP), the main measure of economic growth? In other words, does GDP matter? Read More

Janet Yellen grunging to Nirvana

Nevermind

Last week marked the 25th anniversary of the release of Nirvana’s iconoclastic album, Nevermind, September 24th 1991. The album catapulted the band and the genre of music into the commercial mainstream, something that was perhaps too much for front man Kurt Cobain to handle.

I may be wrong, but I doubt Janet Yellen, Chair of the US Federal Reserve, would count herself among the many fans of the legendary grunge band.  Still, you never know. Janet would have only been 45 when the album was released. Econometrics by day, grunging by night! Read More

Retirement planning; the future is not that far away

Back to the Future

In the film “Back to the Future”, Marty McFly transported from 1985 to the year 2015 in the Doc’s DeLorean time machine. The fact that they had flying cars in the future shows how far away 2015 seemed to those in 1985. Now while it is a disappointment that in 2016 we do not have flying cars, it does get me thinking about retirement planning and how people, including myself, tend to underappreciate how close the future actually is.

For example, take the year 2050. For me, 2050 sounds like something from a sci-fi film. Yet that’s the year I’ll reach the state retirement age of 68 (assuming all goes smoothly of course). 34 years into the future may sound far away, but it’s not from a savings perspective.

This is the real challenge for the pensions industry, effectively communicating to people the need to begin planning for retirement as early as possible in their working career. Unfortunately, the numbers would suggest people are thinking about what they need to retire much too late in their career. Many people face the cold hard reality of having inadequate savings when they retire to fund an enjoyable retirement. Read More

Key points from Janet Yellen’s speech

Janet Yellen

In April I wrote a blog “Central banks and the certain uncertainty paradox”, reminding everyone that these institutions are no more certain than anyone else about how economic conditions will unfold. Still, market participants continue to hang on every word from the leaders of the world’s major central banks.

Last week was no different. At the Jackson Hole Economic Policy Symposium, a forum for central bankers, policy experts and academics, sponsored by the Federal Reserve Bank of Kansas City, Janet Yellen gave a speech, entitled “The Federal Reserve’s Monetary Policy Toolkit: Past, Present, and Future”, surprising market participants with the conviction of this remark on the possibility of interest rate hikes.

“Indeed, in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months”.

However, less attention was paid to the caveat that followed: “Of course, our decisions always depend on the degree to which incoming data continues to confirm the Committee’s outlook. And as ever, the economic outlook is uncertain, and so monetary policy is not on a preset course. Our ability to predict how the federal funds rate will evolve over time is quite limited because monetary policy will need to respond to whatever disturbances may buffet the economy.” Read More

The “20 Hours” Learning Challenge

Performance-vs-Practice-Time

“Live as if you were to die tomorrow. Learn as if you were to live forever.” – Mahatma Gandhi

I have tried but I can’t find a better quote than the above when it comes to learning. For me, the pursuit of knowledge is the essence of experiencing life. Otherwise, life is just boring.

Of course, it is not always easy in the world we live, and making time for learning can be more difficult for some people. Still, too often the excuse of “I have no time” is just a cop out. The fact that there is a much watched reality TV industry tells me that plenty of people are happy to waste time. Don’t get me started on the social media junkies.

Now, for those who are open to learning but are just put off by the amount of time needed to actually learn something new, I recommend you watch the TedxTalk from Josh Kaufman, entitled “The first 20 hours – how to learn anything”.  (YouTube link) With over 6 million views I am not the only one who has found it interesting.

Kaufman delivers an entertaining presentation, in which he shares how the experience of becoming a parent, and the time it required, inspired him to approach learning in a new way. Researching the question “How long does it take to inspire a new skill?” he found the common thread to be 10,000 hours, something which arose from studies on expert level performance. Read More

Football Philosophy: orchestra vs heavy metal

Klopp Heavy Metal

When assessing active fund managers we talk about investment philosophy, those guiding principles which frame the decision making process and drive the investment strategy. The football world is no different, every manager has his own philosophy, some better than others. The skill of the top managers is being able to convey that philosophy to their players, in order to win football matches and ultimately trophies.

In the past, Jurgen Klopp, manager of Liverpool FC, described his football philosophy as ‘heavy metal football’. Comparing his philosophy to Arsene Wenger, Klopp once said ‘He likes having the ball, playing football, it is like an orchestra, but it is a silent song, I like heavy metal more’. (See link) Sadly for the Gooners, the silent song was met by a cacophony of boos at the Emirates yesterday, as Liverpool’s attacking rockers, including a sublime solo effort from new signing Sadio Mane, stole the show.

I have already been accused of getting carried away with my comments on Liverpool winning the league. Still, Klopp’s natural enthusiasm, something which I have touched on before as a quality that differentiates the best managers (see link), makes me believe. As well, I think he has the emotional intelligence needed to keep improving. He will hopefully have learned two things from yesterday. To win the league his team needs more balance, some defenders must be signed before the end of the month. Second, the game is never over, celebrations are best left to the final whistle!