The Current Economic Environment:A Hoover Institution View

For certain investors,it's quite positive,according to John Taylor,Professor of Economics at Stanford University and Senior Fellow in Economics at the Hoover Institution.The long term thing is really fundamentals in the economy,and I don't see them as being positive.The employment to population ratio is down compared to the beginning of the recovery.It's a bad labor market with people dropping out.
Our fiscal policy is way out of line.You've got to exit it in a gradual way.You can't shock the market.There will be pain.There has to be an exit strategy that's understood,that's explained in advance.
Europe is quite a ways from resolving the debt crisis.They're kicking it down the road.
The Federal Reserve's focus on unemployment has resulted in higher unemployment.I'd like a more predictable,rule-based Fed policy,Dr.Taylor said.
John B. Taylor has a BA in economics from Princeton and a PhD in economics from Stanford.He is the author of "Getting Off Track,"a book on the financial crisis,as well as "First Principles:Five Keys to Restoring America's Prosperity."He served as Undersecretary of the Treasury for International Affairs from 2001-2005 and was on the President's Council of Economic Advisors several times.

Private Bank Views 2:Fixed Income Prospects

Asset prices are higher because the Federal Reserve is flooding the market with liquidity,said Michael Brandes,Global Head of Fixed Income Strategy at Citi Private Bank.We're still bullish on fixed income.We look at corporate bonds and mortgage-backed securities,or MBS,where we've seen very good returns.The fact that it's open ended is key.That creates the impact.
We do like dividend-paying stocks.The default risk is low and fundamentals are strong for high yield debt.MBS also offer some spread.
We are very cautious about Europe.There are a lot of concerns about the banking system and other risks on the continent.You want to be cautious about what you buy.
All this liquidity is going to help fundamentals.Fundamentals are still strong and demand is still strong.
Michael Brandes is on the Global Investment Committee at Citi Private Bank.He has a BA from the State University of New York and an MBA from Columbia University Graduate School of Business.

Asian Voices 2-plus a Middle East Moment

The focus,perhaps,should be more on the job market in China,said Donna Kwok,Greater China Economist at HSBC Global Research.Domestic consumption and social stability could be hurt by it.
We think the downturn in China is driven by one thing:external demand,given the downturn in Europe and sluggish growth in the US.We continue to see incremental steps to liberalisation in the next few years.Redistribution of workers is more important to domestic demand in China than absolute numbers of workers.
Mark Konyn,CEO of Cathay Canning Asset Management,notes that in Europe,we're starting to see contraction across the continent,and that's worrying.That could get worse.Spain hasn't been able to work its way through the regional problems.
I think there'll be more asset purchasing.Markets are positioning for more stimulus.We're expecting to see more growth in the second half of the year.I would argue it's more cyclical than waiting for stimulus in China.
In the Middle East,shock waves continue to ripple through the region from the deadly rocket attack on the US Consulate in Benghazi,Libya.Senator John McCain,R-Arizona,said I see it as a newly-elected government that is having the growing pains that any government would have.There are weapons everywhere in Libya, and there are jihadists that have come into the country and continue to come on.These are very dangerous people trying to hijack the revolution.
The attack was done by people who were obviously Muslim extremists.We all should be worried about al-Qaida.The best way to help Libya is to help them train their army and with their intelligence capability.I'm confident we can do that.I cannot be more proud of Ambassador Chris Stevens,the senator had emotionally said of his friend,US Ambassador J.Christopher Stevens,who with three colleagues was killed Tuesday in the organised Benghazi assault by perhaps two dozen militants on the eleventh anniversary of 9-11.

Shop Talk:Where To Find Nature Notes

Dear Readers,
I still publish Nature Notes.They are now in my Extra Content blog,accessible from the links list in the right hand column.I have observed that many of you are still reading the old Nature Notes from the time when I used to publish them in this blog.
Andrew Taylor

Seeking Alternatives:Hedge Fund Insights

I still am expecting this market to crack,said Uri Landesman,President and Managing General Partner at Platinum Partners Multi-Strategy Hedge Fund.Anything to do with Europe,people are really scared.At some point,the Euro situation will clarify,and their equities are now more cheap than US equities.People probably should buy Euro equities.
It's a terrible risk-reward in the US market,in my opinion.Natural gas is getting clobbered again.It's very,very cheap.The Chinese will step in and try to buy assets.There will be significant Chinese purchases in the emerging markets even in 2012.Given natural gas trading in the 2.60s,that's very cheap for countries like China that are very short on natural gas.
Specific biotech companies are totally exogenous if they have an event coming up.If the US economic data come out significantly better,I would change my view on housing and lending.I think some of the industrial metals are interesting here.
We are still very bullish about China long term.The engine that is China will roar again in coming years,Mr.Landesman predicted.
Platinum Partners are affiliated alternative investment managers located in New York.In addition to hedge funds,they offer advisory services exclusively for qualified investors.Mark Nordlicht is Chief Investment Officer at the firm.