Eric Lonergan joined M&G in 2006 as a member of Dave Fishwick's multi asset team. Eric is manager or deputy manager of a number of M&G's multi asset funds. Prior to joining M&G, Eric was managing director and head of macro research at JP Morgan Cazenove. He has a BA in politics, philosophy and economics from Pembroke College, Oxford, and an MSc in economics from the London School of Economics.
Economists have always assumed that lower interest rates boost consumption and reduce the propensity to save. The same logic is encouraging policy makers to pursue negative interest rates and raise inflation targets to push real rates even lower.
But the effects of lower interest rates on saving behaviour may change… Read the article
We need more cash, not less.
Many economists just assume that central banks have hit “the zero bound” on interest rates and that conventional policy is thereby exhausted. Take Ken Rogoff’s bizarre proposal as an example:
“The idea of finding creative ways to get around the zero bound… Read the article
In October 2013, we provided an analysis of “risk parity” strategies. The specifics of this particular investment fad are less interesting, but the core issue of bond-equity correlation is central to asset allocation. We concluded at that time, that the rise in the term premium implied that long-dated… Read the article
It often pays to listen to central bankers. That may seem like an obvious statement. But often you actually have to listen to them – you can’t rely on reports in the media. Every now and then, the most important statements are ignored or under-reported.
This month’s Bank of England… Read the article
In a recent speech to the IMF, Larry Summers kicked-off a collective outpouring of pessimism among the economics profession. The only thing reassuring is that when this many economists agree about a prognosis, it is usually wrong. Not because their analysis is flawed, but often because things happen which… Read the article
Almost a year ago, the Bank of Japan (BoJ) embarked on the most aggressive programme of quantitative easing (QE) we have ever seen. Within nine months the BoJ has been more aggressive than the Federal Reserve Board or Bank of England (figure 1). The stated objective of these policies is… Read the article
Risk parity – the idea that risk, measured by volatility, should be allocated equally across the major asset classes – has been one of the major investment fads of the last 5 years.
The philosophical premise of risk parity is that correlation is more predictable than return.
The most common… Read the article
Deafening noise has surrounded the recent episode in emerging markets. Can it really be the case that the secular growth story was a myth, and the BRICs are now broken? Economies which spent the last 15 years building foreign exchange reserves to insure against balance of payments crises are nonetheless… Read the article
Market reaction to Ben Bernanke’s testimony before the Joint Economic Committee last Wednesday highlighted the critical importance of expectations regarding central policy to asset prices. More importantly, it illustrated the vulnerability of bond markets to significant capital loss.
Discussion of the multi year bull market in almost all fixed… Read the article
Despite running a large budget deficit in each of the past three years, the net debt of the UK government has barely risen.
The distinction between gross and net debt is central to any consideration of a government’s solvency. Gross debt usually refers to the total stock of current… Read the article