March 19, 2018 – Dr. Alan Greenspan addressed our affiliated advisors at the historic Mayflower Hotel in Washington today. ACM’s senior economic advisor warns investment advisors of a bond bubble and rising rates. “It would take repealing the laws of arithmetic to reduce the future possibility of inflation and higher rates. It’s just a matter of when.” he said.
Greenspan also admits to a “Trump Effect” from the Tax Reform and Employment Act which should increase corporate profit margins unlike something he has ever seen in the U.S.. Outside of the U.S., Ireland’s change of corporate tax rates in 2003 would be a recent comparison. The threat of higher interest rates curbing the equity markets has one caveat said Greenspan, “Don’t under estimate the positive effects of the change in corporate taxes. This could keep the negative effects of higher rates on stocks at bay for a period of time”.
Dr. Greenspan’s long-term concerns have not changed since ACM’s 2017 meeting with government entitlements and stagflation topping the list. Sporting Nike running shoes and clearly still at the top of his game, the 92 year old former Federal Reserve Chairman ended the discussion by stating that this is the most difficult period for forecasting that he has experienced since he began in 1948.
ACM’s Annual Due Diligence Meeting is an opportunity for investment advisors from throughout the country to hear our macro economic thoughts which guide our private account portfolio design.