Macro thoughts, 140 characters style:
Does this strike anyone else as being odd? The dominant discussion in the last 12 months is whether the Fed should raise rates or not. And according to most macro indicators the economy is fragile at best and deteriorating at worst. JP Morgan says the risk of recession is rising! And the Fed wants to raise rates? As I’ve noted repeatedly, they need to tread carefully here or the recession they’re trying to thwart will become the recession they cause.
Probability of a US recession in next 12 months rises to a cycle high of 36%, says JP Morgan. Was 30% a month ago. pic.twitter.com/jAYY8qeeBD
— Jamie McGeever (@ReutersJamie) June 5, 2016
The sad state of the economy is getting increasingly reflected in the financial markets as pension funds and other investors based many of their cash flow models on past returns. As a result many investors expect unreasonably high rates of future returns. But instead of tempering expectations it looks like many investors are simply diversifying into riskier portfolios. Will they get the returns they need from these alternative asset classes? I suspect not….
— Prof. Steve Hanke (@steve_hanke) June 4, 2016
The best Muhammad Ali obituary was, unsurprisingly, by Muhammad Ali:
— J.K. Rowling (@jk_rowling) June 4, 2016
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.