(that's me at the US Federal Reserve! Notice how it is not crawling with tourists!)
I am surrounded by economists and central bankers this (Canadian Thanksgiving) weekend in Washington as it is the 57th annual meeting of The National Association of Business Economists where the Theme is "North America's Place In A Changing World Economy", exploring the "tectonic forces" shaping the world economy: demographic shifts, political change, technological advances, deeper trade linkages and environmental stress which are pressing businesses to rapidly evolve and stressing governments, all in the context of a sub par recovery from the Great Recession. I am joined here in Washington by none other than Bank Of Canada Governor Stephen Poloz who will be addressing the conference today.
He comes to Washington from Lima, Peru where he addressed a meeting of the Institute of International Finance: saying that "financial stability issues add a new dimension of risk to the many uncertainties that are already present in the conduct of monetary policy".
"the reality is that central banks have to cope with tremendous uncertainty regarding financial stability issues"
Repeat: tremendous uncertainty!
So the institutions that we are counting on to lead us out of the "wilderness" are facing tremendous uncertainty.
Financial market participants are buying equities and commodities in joyous rapture over the last week while central bankers are questioning the very basis of monetary policy and how it is to be implemented with maximum efficiency (which they really have not figured out yet).
At the same meeting in Peru, US Federal Reserve Vice Chairman Stanley Fischer reiterated the Fed's desire to begin to raise interest rates, but added an interesting caveat:
"However, that is an expectation, not a commitment. Both the timing of the first rate increase and any subsequent adjustments to the federal funds rate target will depend critically on future developments in the economy. "
"For example, it is conceivable that inflation may rise more slowly or rapidly than we currently anticipate. Should such developments occur, we would adjust the stance of policy in response".
In other words, they are just not sure.
Meanwhile 3rd and 4th quarter earnings expectations continue to be adjusted downward now anticipating negative earnings growth for Q4.
Tune in for a more detailed discussion of these and other investing and wealth management issues on our weekly webinar tomorrow.
We should have a recorded version available on our website by approx. 5pm
Let's go Blue Jays!!
Scott Tomenson,CIM Managing Partner, Chief Investment Strategist