DEAR READER
JUNE 2013 | VOL. 27 NO. 6
We live in a world of quantitative easing and short-term interest rates close to zero; a world where central banks have recently taken on a new role, becoming the most active institutional investors in the world. This juncture poses a lot of questions not only for investors but also for companies in deciding corporate strategy. Between that and the uncertainty caused by US quantitative easing and other central banks timing of exits from major asset purchases, it is little wonder that corporations are unsure how to manage near-term financial strategy.
We have dedicated our cover story to this topicwhose effects are already being felt in many aspects of corporate life worldwide.
David Kotok, chairman and CIO of Cumberland Advisors, expressed the matter well before a recent meeting of the Global Interdependence Center: Never did its creators envision that the GIC would one day confront the central banking issues that presently dominate the worlds financial markets and drive economic outcomes. Never did the GIC anticipate that it would have to view financial markets through the lens of a global situation in which about 85% of the capital markets the world over are driven by quantitative easing and the major currencies of the world all trade with short-term interest rates near zero.
In another sign of the times, we once again see demonstrations of the increased power and international relevance of Brazil and China. First, the World Trade Organization has elected a director-general who doesnt come from an advanced economy: Brazilian diplomat Roberto Azevedo.
Second, Chinese authorities are challenging the well-known Doing Business report of the World Bank and its ranking of countries according to the ease of opening and running a business. They question the annual reports methodology and economic model. As a result, World Bank president Jim Yong Kim has set up an independent review panel to evaluate it. These two big developments signal the increasing might of these countries on the global economic scene.
Andrea Fiano
