TRILOGY WORLD REPORT
2 Key Issues for 2010 | December 2009
Looking back at global financial markets in 2009, it is probably fair to say that most investors are both astonished and relieved that global stock markets – and the economies they reflect – have mostly surprised to the upside over the course of the year. Compared to widespread fears of Great Depression 2.0 that prevailed earlier in 2009, the recovery in economic data in most major industrial nations and evidence of boom-like conditions in key developing nations like China has been welcome news indeed. <full report>
Conflicting Impulses | October 2009
In the wake of last Fall’s financial chaos, we have found it useful to follow broad-based indicators of financial conditions to try to anticipate economic and market responses to two types of shocks: (1) those generated by financial markets in response to Lehman’s bankruptcy and (2) those generated by policymakers as they tried to counter the enormous deflationary shock created by the market turmoil. <full report>
Looking Back at Lehman: An Empirical Analysis of the Financial Shock and the Effectiveness of Countermeasures | October 2009
This paper uses a daily measure of U.S. financial conditions called the Bloomberg Financial Conditions Index to assess the financial shock associated with Lehman’s bankruptcy and the effectiveness to date of the strong countermeasure initiated by policymakers. In contrast to the analysis of Lehman skeptics such as John Taylor (2008, 2009) and John Cochrane and Luigi Zingales (2009), the evidence we present supports the view of many practitioners that the decision not to rescue Lehman represented an immediate and massive shock to the financial system that was larger by an order of magnitude than anything seen over nearly two decades. <full report>
Amphetamine Rush? | July 2009
The American Economic Association tried something different this year at its annual meeting. For the first time ever, the dismal science sponsored a humour forum, which featured a “standup economist” named Yoram Bauman of the University of Washington.
Amid numerous serious talks about the global financial crisis, Dr. Bauman’s humorous monologue added a worthwhile biological perspective: <full report>
Sale of the Century? | March 2009
We were intrigued by comments made by White House economic advisor Larry Summers in mid-March, suggesting that the U.S. stock market was being offered at prices that made it the “sale of the century” for investors with a long-term perspective. These comments were made a few days after the S&P 500 had posted a devilishly low intra-day mark of 666: <full report>
Is the U.S. headed for Japanese-Style Deflation? | December 2008
In the wake of a collapsed real estate bubble in the 1990s, Japan experienced more than a decade of weak growth, price deflation and abysmal returns on invested capital. A reasonable question among many investors is whether the U.S. is headed for a similar fate. A related question is why the U.S. should expect quantitative monetary easing to meet with success, when such policies did not appear to succeed in Japan. <full report>
Snakes on a Plane | July 2008
Hollywood film producers have developed a shorthand way of communicating a great deal of information about potential film projects in terms of older, well-known films with a new twist. For example, the film Speed was pitched as "Die Hard on a bus." Or the film Alien was "Jaws in space." In a class by itself (the best bad movie ever?) was the 2006 film Snakes on a Plane, where the pitch, the plot summary, and the advertising tag line were all summarized in the title. <full report>
Foggy Bottom? | Spring 2008
Foggy Bottom is an old neighbourhood in Washington, D.C., so named because of the vapours rising from the swamp. We are hopeful that it is also an apt name for the current market environment, which has numerous characteristics associated with stock market bottoms. That said, the outlook is clouded by noxious vapours rising from the financial swamps. <full report>
Will 2008 be a Happy New Year? | December 2007
Global equity investors may be forgiven for approaching the new year with more than the usual degree of trepidation. There is certainly no shortage of things to worry about, with the financial media devoting considerable ink to the global credit crisis, high oil prices, the weak U.S. dollar, and associated fears of global recession, stagflation, or worse. <full report>