January 16, 2015

This week – Part II of our exclusive annual outlook with Wall Street’s legendary number one economist, Evercore ISI’s Ed Hyman. This year he is joined by another WEALTHTRACK exclusive, New York Life’s Vice Chairman and Chief Investment Officer, John Kim. They will discuss the striking differences between the U.S. economy since the financial crisis and the slow, uneven rebound in the rest of the world and what they mean for global economies and markets.

CONSUELO MACK: This week on WEALTHTRACK, in Part 2 of charting your course for the New Year our exclusive guests, Wall Street’s number one economist, Evercore ISI’s Ed Hyman and New York Life’s global Chief Investment Officer John Kim scan for safe harbors and opportunities in turbulent foreign markets. Financial thought leaders Ed Hyman and John Kim are next on Consuelo Mack WEALTHTRACK.

Hello and welcome to this edition of WEALTHTRACK, I’m Consuelo Mack. One of the most striking global economic divergences since the financial crisis has been the difference in the recovery of the United States versus much of the rest of the world.

The U.S. has come back earlier and faster than Europe and Japan for instance. And while the U.S. economy is picking up steam, theirs are struggling. Even China’s economy is slowing.

The differences were quite pronounced last year and are reflected in a couple of key indicators.

As a recent chart of market performance in The Wall Street Journal illustrated, the U.S. is ahead of the pack. Last year the S&P 500 led the Nikkei and far outdistanced the MSCI Emerging Markets and Europe’s indexes.

Another area of U.S. dominance is the dollar. The buck is back big time. The rally started mid-year. As other nations announced various plans to ease monetary policy to stimulate their economies, the Fed signaled it was considering tightening.

Interest rates on U.S. Treasuries might be trading near record lows here, but compared to other government bonds Treasury yields are very attractive.

And they should remain so. According to the top economic team at Evercore ISI there have been 40 easing moves around the world in the last three months alone, ranging from Switzerland to Japan to China.

This week we are continuing our exclusive annual outlook interview with legendary economist, Ed Hyman who has been ranked Wall Street’s Number One economist for an unprecedented 35 consecutive years. Ed recently became the Chairman of Evercore ISI, having sold his firm ISI to Evercore, a leading investment banking advisory firm.

This year he is joined by another exclusive WEALTHTRACK guest, financial thought leader John Kim. Kim is the Vice Chairman and Chief Investment Officer of New York Life Insurance Company where he oversees more than $500 billion in global assets.

New York Life is a sponsor of WEALTHTRACK but Kim is here because of his distinguished professional track record.

I began the interview by asking them about the possibility that the U.S. economy has decoupled from the rest of the world and can continue to recover on its own.

ED HYMAN: It seems inconceivable to me that the U.S. could decouple or that the foreign economies could decouple. We are one together. We have become a global economy, and so we’re intertwined with financial flows, with investment flows and with economic activity. So my view is that the U.S. economy is now pulling the foreign economies, and then I look to see how strong are we and how much am I pulling, and in the case of Europe they’re moving a little bit forward which is a lot better than moving a little bit backwards if you’re trying to pull something, and China is slowing but it’s still moving forward. And so the general picture I get in my mind is that we are able to keep pulling ahead, but whenever I think the economy is going to take off here I remember I have a big load to pull, and so I think I’ll just keep pulling in a steady pace. If you get that picture in your head, it creates a sort of secure feeling that we’re moving ahead but not going to go too fast, and this drop in oil is a part of that epic where the oil’s in part down because the global economy is still slow.

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