Markets Haven’t Figured Out Economic Danger: Spence

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Aug. 1 (Bloomberg) -- Michael Spence, professor at NYU Stern School of Business, and Josh Rosner, managing director at Graham Fisher and Company, discuss yesterday’s market selloff and the global risks that brought us to this point. They speak on “Bloomberg Surveillance.”

Migrated to nyu.

Stanley fischer has been known to throw chalk.

I never did it.

Michael spence on how we control our emotions when things go down.

This is -- there are two things going on worth attention.

The markets have not figured out how dangerous the global economy has become.

Secondly, we have these better than expected gdp reports.

That translated in monetary policy.

Two crosscurrents.

Josh rosslyn, you are shaking your head ryes.

Do you agree that this is possibly global contagion?

As a global contagion, no.

I agree we have a larger issue.

The rate of recovery globally has not been what it has been expected to be.

If you look and dig into participation rates, we have real reasons for concerns.

There is too much irrational exuberance.

What did you mean a moment ago when you said global markets are dangerous?

The global economy, the tradable side of it relies on flows of people, information, capital and goods.

All four are under threat.

We are shooting down airplanes.

There is a problem about where to fly.

Cyber security as a bonus contention.

Asia has tons of tension.

The middle east is a disaster.

I think the underpinnings, the basic stability that underpins these global flows is questionable.

There is a wall where investors have to face.

Everyone comes back to the idea that there is so much liquidity around the world.

As long as the central banks pump money into the system, the path of least resistance is higher.

That has been true, especially in the united states.

You do have to stop and question whether without functioning infrastructure, those flows make it to end markets and that is the reason we have not seen a stronger recovery, even with all of the increase.

Quickset think our audience would be fascinated to know how michael spence invest.

Academics have a strong opinion about how to place capital.

What is the spence formula?

After the crisis, i became conservative.

I went to a specialized small investment house that found a way to find yields.

There is a longer-term set of investments in private equity and absolute return fund.

Thank you for that clarity.

This text has been automatically generated. It may not be 100% accurate.


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