Comments on: Hockey Stick or a Plank? http://dukeresearchadvantage.com/charvey/2010/03/06/hockey-stick-or-a-plank/ Research that Matters Thu, 27 May 2010 07:41:08 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Adrian Helfert http://dukeresearchadvantage.com/charvey/2010/03/06/hockey-stick-or-a-plank/comment-page-1/#comment-544 Adrian Helfert Sat, 06 Mar 2010 19:03:11 +0000 http://dukeresearchadvantage.com/?p=1154#comment-544 A couple of quick freeform thoughts here. I think the CFO survey is one of the better indicators our there currently. One can do regressions to the heart's content and get high r-squareds all day, but it's nice to see what's actually on CFO's minds "this time". --the high earnings number combined with the low expected rise in employment was worrisome. That seemed to the highly discussed "jobless recovery". Coupled with an expected wage increase that's only on par with historical inflation (though higher than implied inflation), I think a sustainable recovery to 5-6% nominal growth looks tough. --there was a considerable uptick in the outsourced employment expectations. During the last growth cycle we saw a lot of vertical growth and consolidation. Without synergistic gains created through enough job cutting, the economy was likely in an overemployed position. On the other side of that, more specialization (which is what outsourced indicated to me), could be very could for an educated work force like the US economy no? This last point is less clear to me, but what is clear is that we're all looking for the next sector to reignite growth, but a shift to more specialized services could be the key to that door. --Concerning EM, it seems to me they're still pretty leveraged to developed market growth as, for the most part, goods-economies. Questions I don't have the answer to are 1) whether the high(er) growth rates we're seeing in the BRICs, etc are sustainable without historical levels of developed market growth 2) if we'll see greater cross-border trade relation problems coming as post-recession economies (like the US) try to repatriate jobs. On the last point, I expected to see more of this earlier (especially after the heightened tensions in the China-tire tariff discussions), but we may now be beyond that. -I'd love to see a blog on your thoughts on the current yield curve. Especially now taking into account the increased "credit-like" risk of the US government implied by the compression in swap spreads (and negative in the long end).<div class="comment-remix-meta"><a href="#" class="quote" onclick="quote('544','Adrian Helfert','A couple of quick freeform thoughts here. I think the CFO survey is one of the better indicators our there currently. One can do regressions to the heart\'s content and get high r-squareds all day, but it\'s nice to see what\'s actually on CFO\'s minds \"this time\".\n--the high earnings number combined with the low expected rise in employment was worrisome. That seemed to the highly discussed \"jobless recovery\". Coupled with an expected wage increase that\'s only on par with historical inflation (though higher than implied inflation), I think a sustainable recovery to 5-6% nominal growth looks tough.\n--there was a considerable uptick in the outsourced employment expectations. During the last growth cycle we saw a lot of vertical growth and consolidation. Without synergistic gains created through enough job cutting, the economy was likely in an overemployed position. On the other side of that, more specialization (which is what outsourced indicated to me), could be very could for an educated work force like the US economy no? This last point is less clear to me, but what is clear is that we\'re all looking for the next sector to reignite growth, but a shift to more specialized services could be the key to that door.\n--Concerning EM, it seems to me they\'re still pretty leveraged to developed market growth as, for the most part, goods-economies. Questions I don\'t have the answer to are 1) whether the high(er) growth rates we\'re seeing in the BRICs, etc are sustainable without historical levels of developed market growth 2) if we\'ll see greater cross-border trade relation problems coming as post-recession economies (like the US) try to repatriate jobs. On the last point, I expected to see more of this earlier (especially after the heightened tensions in the China-tire tariff discussions), but we may now be beyond that.\n\n-I\'d love to see a blog on your thoughts on the current yield curve. Especially now taking into account the increased \"credit-like\" risk of the US government implied by the compression in swap spreads (and negative in the long end).'); return false;">Quote</a></div> A couple of quick freeform thoughts here. I think the CFO survey is one of the better indicators our there currently. One can do regressions to the heart’s content and get high r-squareds all day, but it’s nice to see what’s actually on CFO’s minds “this time”.
–the high earnings number combined with the low expected rise in employment was worrisome. That seemed to the highly discussed “jobless recovery”. Coupled with an expected wage increase that’s only on par with historical inflation (though higher than implied inflation), I think a sustainable recovery to 5-6% nominal growth looks tough.
–there was a considerable uptick in the outsourced employment expectations. During the last growth cycle we saw a lot of vertical growth and consolidation. Without synergistic gains created through enough job cutting, the economy was likely in an overemployed position. On the other side of that, more specialization (which is what outsourced indicated to me), could be very could for an educated work force like the US economy no? This last point is less clear to me, but what is clear is that we’re all looking for the next sector to reignite growth, but a shift to more specialized services could be the key to that door.
–Concerning EM, it seems to me they’re still pretty leveraged to developed market growth as, for the most part, goods-economies. Questions I don’t have the answer to are 1) whether the high(er) growth rates we’re seeing in the BRICs, etc are sustainable without historical levels of developed market growth 2) if we’ll see greater cross-border trade relation problems coming as post-recession economies (like the US) try to repatriate jobs. On the last point, I expected to see more of this earlier (especially after the heightened tensions in the China-tire tariff discussions), but we may now be beyond that.

-I’d love to see a blog on your thoughts on the current yield curve. Especially now taking into account the increased “credit-like” risk of the US government implied by the compression in swap spreads (and negative in the long end).

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