Rock Creek 3Q 2016 Quarterly Call Highlights

On October 6, Rock Creek CEO and founder Afsaneh Beschloss and Senior Advisors Dr. Alan Greenspan, Dr. Laura Tyson and Cyrus Ardalan shared their views on the global economic outlook, with a focus on the economic implications of the U.S. presidential election, the Fed's monetary policy stance and the impact of a "hard" Brexit.

In the discussion, Beschloss addressed the starkly different platforms presented by Hillary Clinton and Donald Trump and their implications for the US economy, as well as the probability of a Fed rate hike before the end of the year. She also addressed the fallout from British Prime Minister Theresa May's announcement this week that that the UK would begin extracting itself from the EU in March 2017.

Greenspan noted that business confidence in the US has been suppressed for quite some time and that the political climate "cannot help," rejected any likening of Donald Trump's economic policies to Ronald Reagan's and argued that "fiscal space is an illusion" due to high entitlement spending. He also addressed the outlook for pension plans, saying that they would remain unfunded until we reach a "normal rate of a return on intermediary assets." Greenspan highlighted that there is not a "new normal" for interest rates since they are roughly where they have been for generations, and expects that interest rates will eventually return to "human normal."

Tyson laid out the implications of both presidential candidate's proposed tax plans for the debt and deficit, and noted that investors should be worried about the general lack of confidence in central banks globally. She also assessed the infrastructure investments, vocational training and green investments proposed by Hillary Clinton, noting that Clinton's plan includes proposals to pay for infrastructure spending.

Ardalan believes that although the doomsday scenarios about the UK economy never came to fruition, volatility in the Sterling will persist and foreign direct investment is likely to decline. His key concern is tail risk since the uncertainty around executing Brexit is so high. He noted that a hard Brexit would have serious consequences for the UK, especially for the financial industry, though he believes the most likely scenario is some type of free trade agreement between the UK and EU. Ardalan said that while a lot of attention has been given to tariffs, non-tariff barriers - especially for the finance and services industries - are most worrying.

Comments

What to Read Next