Central bankers from 40 countries met last weekend for the annual gathering at Jackson Hole, Wyoming.
Bank of Canada senior deputy governor Carolyn Wilkins was among them.
“Fostering a Dynamic Global Economy,” was the motto for this 41st edition.
And all eyes were on European Central Bank President, Mario Draghi, for two reasons:
The first, being that Janet Yellen, the Chair of the U.S. Federal Reserve, appears to be a bit of a lame duck as the general impression is that she will be replaced in February when her term comes up,
Hilliard MacBeth is a financial portfolio manager, based in Edmonton, Alberta, and the author of books on investing, including his most recent, “When the Bubble Bursts: How to Survive the Canadian Real Estate Crash”
He says,”there’s only been one chair of the Federal Reserve that’s ever not been given, that I’m aware of, in the last fifty years, not been given a second term, and that was a fellow named Miller in the 1970’s, which nobody remembers, because he didn’t get a second term for one thing.”
ListenIt’s understood, current President, Donald Trump, wants to select a new Chair of the Federal Reserve, and Yellen’s speech last Friday, touting the benefits of strong banking regulations was widely seen to guarantee her exit.
“So it feels like we’re at a real crossroads here, in terms of where the monetary policy is going”
Donald Trump is keen to move in the opposite direction and loosen banking regulations.
The second reason for Draghi’s high profile at the event is the strong economic recovery now underway in Europe.
“The Bank of Canada, obviously has turned very very hawkish in removing stimulus, you’ve got the Europeans talking about it but having not really done it yet, but there soon going to start doing it, and then you’ve go the Federal Reserve that’s been hiking rates for a while now.” MacBeth says.
He says there’s four trillion dollars in total reserves that the U.S. Federal Reserve is holding on behalf of the banking system. The money is available for loans, and the big questions is what are they going to do with it.?
“So it feels like we’re at a real crossroads here, in terms of where the monetary policy is going and where the interest rates are going, and it really looks like, excluding the possibility of a recession, it looks like rates are heading higher for sure.”
“We’re definitely telling our clients to be cautious and conservative in their investment stance right now.” MacBeth says.
“We had a horrible crisis in 2008 – 2009, the anniversary of Lehman Brothers is coming up in September, I think it’ll be the nine-year anniversary September 14th, and because of all the stimulus that was added in and some of the other government bailouts and programs that were done mostly by the U.S. but also by Europe and a little bit by Canada, we’ve had a tremendous run for that time, and normally these cycles last five or six years, so we’re actually on borrowed time now in terms of expecting a normal cycle, which would be a recession or correction of some sort, and we haven’t had either one.” he says.
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