February 13, 2015

What are the biggest financial game changers of this decade? The unprecedented cycle of global central bank easing and low interest rates? The dramatic decline in oil prices? On this week’s WEALTHTRACK, Fort Washington Advisors’ Nick Sargen discusses the economic and market moving shifts in energy, inflation and central bank policy – and what they mean for investors.

Nicholas Sargen Senior Investment Advisor Fort Washington Investment Advisors

CONSUELO MACK: This week on WEALTHTRACK, financial game changers. They are coming at us fast and furious from plummeting energy prices, to lower interest rates, to deflationary forces. How should you respond? Veteran international economist and strategist Nick Sargen discusses the best investment course next on Consuelo Mack WEALTHTRACK.

Hello and welcome to this edition of WEALTHTRACK, I’m Consuelo Mack. If I were to pick the biggest financial game changer of this decade it would be the unprecedented cycle of global central bank easing that we are seeing. Ed Hyman’s top economic group at Evercore ISI has counted more than 500 of easing moves over the past three plus years, with no let up in sight. In recent weeks countries from India, to Egypt, to Peru to Turkey, to Canada to Denmark, to Russia to Australia have cut rates. Other central banks have eased credit in other ways including the European central bank’s intention to buy over a trillion dollars worth of Eurozone government and corporate bonds.

As we have reported numerous times on WEALTHTRACK, for better or for worse these low interest rates have been sending investors to the stock market, in the U.S. in particular, and other asset classes for higher returns. Hyman’s group believes they will continue to do so.

The other big game changer in the shorter term has been the dramatic decline in oil prices which have fallen more than 50% since the middle of last year. The last two times oil prices plummeted in 1986 and from 1997 to 1998, the U.S. economy experienced strong growth. Will that be the case this time?

Falling oil prices are a major contributor to another game changer, low to declining inflation rates. Inflation has slowed in virtually all of the developed countries, the U.S. Europe and Japan and in many developing nations including China, India and Mexico.

This week’s guest is tracking all of these trends and advising clients about them. He is Nicholas Sargen, Chief Economist and Senior Investment Advisor at Fort Washington Investment Advisors, the asset management arm of Western and Southern Financial Group with close to $50 billion in assets under management. A PhD economist, Sargen was the Chief Investment Strategist at Fort Washington until last year and has held many high ranking positions at major Wall Street firms.

I began the interview by asking him why he considers lower oil prices to be such a major game changer.

NICK SARGEN: Consuelo, throughout my career, the last four and a half decades, any major change in oil prices has a tremendous impact. We’ve had four periods of spikes, double or quadruple, four recessions.

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