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Andreas Höfert

Andreas Höfert is Chief Economist Wealth Management and Regional Chief Investment Officer Europe.

Andreas Höfert recently

November 2014

  1. Some thoughts on European and German interest rates

    Blog post | Tags: Andreas Höfert

    Last week I had the honor of giving a lecture during the Economists’ Career Day at my alma mater, the University of St. Gallen, to students, faculty members and alumni. My talk centered on the views that we at the CIO team have developed over the last five years regarding the euro crisis. We have written extensively about it in numerous publications, so I will not repeat everything here. However, there is one point I’d like to expand on since someone challenged me on it after my speech.

  2. Helmut Kohl is right, but not right enough

    Blog post | Tags: Andreas Höfert

    Economists were not very good at forecasting the financial crisis of 2007-08 and the ensuing Great Recession. They were far better at heralding the euro crisis. Before the euro was introduced in 1999, many warned that the way the European Monetary Union was constructed would eventually lead to the kind of crises we have experienced during the last five years.

  3. Extreme mixing of economic policies

    Blog post | Tags: Andreas Höfert

    More than a quarter century ago, while studying macroeconomics, I examined the tools and options a government had at its disposal to influence growth, employment and inflation, and the world looked easy. At the time, there were two competing schools of thought regarding these options: the “do something” school, or Keynesian tradition, and the “do no harm” school, or monetarist tradition.

October 2014

  1. Eurozone: les stress but still tested

    Blog post | Tags: Andreas Höfert

    I am almost ashamed to admit it: I am a big fan of Michael Bay’s blockbusters. My favorite is The Rock (1996), but a close second is Armageddon (1998). When I envision the latter, I am reminded of the current state of the Eurozone.

  2. Wicked games in the Eurozone

    Blog post | Tags: Andreas Höfert

    Usually when any crisis nears its end, finger pointing and blame gaming start. Who or what was responsible, or can be used as a scapegoat by those who suffered from the crisis?

  3. Low interest rates are here to stay… for now

    Blog post | Tags: Andreas Höfert

    The aftermath of the financial crisis has been characterized by lower economic growth and much lower inflation than what was experienced before the mayhem. This alone could explain why interest rates are so low. Real interest rates usually reflect real growth, and the difference between nominal rates and real ones is explained by inflation expectations.

  4. The death of inflation… and how it could revive

    Blog post | Tags: Andreas Höfert

    The biggest puzzle in the post-financial crisis environment, perhaps the single most important defining characteristic of the “new normal,” is the lack of inflation. If someone had guessed six years ago that major central banks, among them the US Federal Reserve, would have expanded their balance sheets fivefold, he or she would have concluded that inflation rates by now would be running at least in the upper single-digit range.

September 2014

  1. Secular stagnation: Causes and consequences

    Blog post | Tags: Andreas Höfert

    Six years ago, on the verge of what would be known as the Great Recession, a fierce dispute erupted among pundits about the nature of the unfolding economic slump. The main sticking point of this “alphabet soup” debate was the shape the recession would take: V, U, L or W? Depending on the chosen letter, the political recommendations were quite different.

  2. A medical report on the Eurozone patient

    Blog post | Tags: Andreas Höfert

    One of my former macroeconomics professors used to say, “Nature has given us two eyes: one for demand, the other one for supply.” You can expand this metaphor further. Nature has given us legs - the supply side. And it has given us arms - the demand side. Even before the 2007-2008 financial crisis, the Eurozone’s legs were quite fragile. That accident broke them. And the euro crisis that followed shattered them further.

  3. How helicopter money ensures planets do not diverge

    Blog post | Tags: Andreas Höfert

    "Are equities and bonds on the same planet?" This is what a colleague of mine from a US investment house asked in a research note last week. Indeed, it is a rather good question. While we saw last week the S&P 500 closing for the first time above the 2,000 level, we also saw the US 10-year Treasury yield briefly flirting with 2.30%, a low not experienced since mid-2013.

August 2014

  1. France's uncertain near future

    Blog post | Tags: Andreas Höfert

    What motivates a politician to strive for high office? Once the campaign is over and the office is secured, the sobering reality often is that not much can be done. Do the privileges of being the head of state really compensate for this frustration, especially for a person of honor and integrity?

  2. The German wage issue

    Blog post | Tags: Andreas Höfert

    A great idea can suddenly sound ridiculous when expressed by the wrong person or institution. This is what came to mind after hearing the recent call by the German Bundesbank (BuBa) and the European Central Bank (ECB) for German employers to raise wages by 3% in their ongoing annual negotiations with their workers.

  3. Who is afraid of the big bad carry trade?

    Blog post | Tags: Andreas Höfert

    Quite often, I am asked what my biggest regret is from an investor’s perspective. My regret dates back to the pre-financial crisis months of 2007. No, I can reassure you right away: the regret is not that I was invested in the US real estate market or in some fancy credit structure. It is related to the currency market and that I didn’t take some mispricing there more seriously, both as a risk signal and as a possible investment opportunity. If I had, I could have benefited from one of the very few hedges as chaos broke loose in September 2008.

July 2014

  1. Unintended consequences of Abe's monetary arrow

    Blog post | Tags: Andreas Höfert

    When Shinzō Abe started his second term as Japan's prime minister in December 2012, he introduced an ambitious economic program to pull Japan out from two decades of deflationary slump. This program comprised three so-called "arrows": fiscal stimulus, monetary easing and structural reforms. Meanwhile the first two arrows have been shot but the third is still in the quiver; once again it has been easier for a government to print and spend money than to reform.

  2. Brazil and the perils of overconfidence

    Blog post | Tags: Andreas Höfert

    The football party is over and Lineker’s famous quip that "football is a simple game; 22 men chase a ball for 90 minutes and in the end Germany always wins" proved prescient. Pundits are now dissecting every statistic from the World Cup to find new trends or to validate old truths. Many are still scratching their heads over how Brazil was crushed 1–7 by Germany in the semifinals, and fell 0–3 to the Netherlands in the match for third place. There seems to be a lesson here that is also important for investors.

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