• - The Federal Reserve Bank of St. Louis published a piece showing that the “jobless recoveries” of the past 2 recessions is due to the process of job polarization: increased demand for high skilled (high-wage) workers and low skill (low-wage) workers with declining opportunities for middle-skill workers.

job polarization is not a gradual process, but rather a phenomenon characterized by job loss in routine occupations during economic downturns. Second, jobless recoveries are due to job polarization.

  • - This week we saw rising interest rates and declining equity values in emerging economies with persistently high current account deficits. Recall that a current account deficit necessitates that foreign investment makes up the disparity between production and consumption. Foreign Policy does a great job of breaking down the dynamics between flow of funds, prices appreciation, inflation, and economic growth if you need a little catch up.
  • - A great synopsis of JP Morgan economist Michael Feroli was done by Business Insider that summarizes his salient points of the reduced potential output of the United States. Namely,
    1. Reduced productivity
    2. A continued decline in the labor force

    Feroli sees real potential output for the United States declining to 1.75% over the next several years.

  • - Jan Groen of the New York Federal Reserve developed an interesting methodology to extrapolate historical TIPS yields. As inflation has been closely watched during times of monetary easing and will continue to be closely watched indicator as the Fed winds down its asset purchases — having a longer history of TIPS break even yields provides far capacity to more effectively test potential long term impacts.
  • Ben Stell & Dina Walker illustrate why the new forward guidance policy of Britian (modeled after the Federal Reserve) was largely and will continue to be ineffective.

About Benjamin M. Gross

Benjamin is a Managing Director in Newfound’s Product Development and Quantitative Strategies group, where he is responsible for the ongoing research and development of new intellectual property and strategies. Specifically, Benjamin’s focus is in the area of exploring model applications to fundamental, economic and systemic market variables. Drawing on his years of experience in the financial services industry, he helps to ensure that Newfound’s products and messaging effectively meet the needs of investors and portfolio managers. He also plays a critical role in developing new business and client relationships.