East Coast CIO Forum – Nov 29, 2011

Hi Everyone,

As a follow up to our November 29th meeting, we would like to thank Kurt Brungardt and MSD Capital for once again hosting our East Coast CIO Forum event.  We so appreciate your hospitality.  Special thanks to our esteemed guest speaker, Larry Harris, (please see bio below), for flying in from California to join us for an evening we shall not forget!  Thank you Larry for providing a fresh view on the past, current, and future state of the economy.

Some of Larry’s thoughts from the meeting included the following:

  1. We are headed towards a “double dip” recession. Some reasons are:
    1. The government is not making the right policy decisions
      1. We should be investing in education
      2. We should be taxing oil
      3. We should be dealing with the European financial crisis
    2. We have major structural economic imbalances
      1. US demographics, the aging of the population, is driving reduced consumer demand, less need, less conspicuous consumption
      2. Durable goods lasting longer than ever before (people do not need to buy them as frequently)
      3. Retirement/health care costs are way up and people living longer
      4. Significant changes in the labor forces—youth not as motivated economically
      5. We are approaching a limit on how much US debt others (esp. China) are willing to hold
      6. Commodity prices continue to head higher given significant growth in world populations and the rising power of the middle-classes in the BRIC (Brazil, Russia, India and China) countries
    3. Real-estate continues to be a major problem and the expectation is that prices will not rise
      1. Same issues as general demographics: people getting older, having fewer children, spending less on conspicuous consumption
      2. We have massive overhead in both residential and commercial real-estate
      3. Homes in desirable places (e.g. vibrant cities) are an exception and will see price stability/increases
  2. How to avoid further recession:
    1. Increase consumption (shift from sales tax to estate taxes)
    2. Add condition to Medicare benefits and social security that requires elderly to grant power of attorney to either the government or to an agency with a decision on how to handle end of life care or to opt out of granting power of attorney.  The thinking is that most people, given the choice, would grant power of attorney. This would help resolve issue of disproportionate spending on end of life care.
    3. Remove impediments to hospice care; for instance, offer free life record production for elderly
    4. More labor is better, but primarily benefits rich, not the working class
    5. Change immigration rules so that highly educated immigrants, particularly those that came to US for education can choose to stay in US
  3. Real Estate
    1. Too many single family houses built
    2. More retirement residences will be required
    3. Commercial real estate won’t do well because of low consumerism
    4. Taxes will likely rise to more evenly distribute income
  4. Message to Young People
    1. Study hard
    2. Recognize that competition is global
    3. We are wealthy enough to support the arts
    4. There are some wonderful things happening in medical and materials sciences. (Specifically cancer and plant manipulation)
  5. Policy Recommendations
    1. Reduce sales taxes to stimulate spending.
    2. Increase estate taxes to raise money without a major reduction in spending.

Thanks again to all the attendees for joining us at the meeting.   Your overwhelming response and support made this a standing room only event.

We much appreciate everyone’s support throughout 2011, and look forward to many exciting events in 2012!

-malka
Malka Treuhaft
Executive Director East Coast CIO Forum &
President
Truision Inc.
646.942.2625 (office)
917.589.1069 (mobile)
718.375.1529 (fax)
www.truision.com

The following companies  registered for the November 29th meeting:

MSD Capital,  Morgan Stanley,   Alliance Bernstein,  Promontory Financial Group, LLP,   McCann-Erickson Advertising,   AEGIS,   AIG,   XL Global Services, Inc.,   SBLI USA Mutual Life Insurance,cInvestment Technology Group (ITG),   General Electric,   Connolly Inc., Kroll,   Eton Park,   Folica.com,   Barclay’s Capital,   Financial Guaranty Insurance Co.,   Wolters Kluwer,  Credit-Suisse,  Broadridge,  GHF Group,   Millennium Management LLC,  Broadridge,   iQ Venture Advisors, LLC,   MacAndrews and Forbes,   Bank of New York Mellon,   Fir Tree Partners,   Burke Supply,   Deerfield Partners,   Beth Abraham Health Services,   The Children’s Place,   Goldman Sachs,   Barnard College,   Purdue Pharma,   Centurion Global Management, LLC.,  McGraw-Hill Companies,  Tigris Financial,  and Warnaco.

Please join us in a fascinating discussion,  with our esteemed speaker,   Larry E. Harris,  appointed in 2002 as the Chief Economist of the U.S. Securities and Exchange Commission,  and currently holds the Fred V. Keenan Chair in Finance at the USC Marshall School of Business.  (Please see bio below).

Meeting Agenda:

  • Future,  very big view, prospects for the world economy
  • Demographic realities and their implications for the future here and abroad
  • Employment and consumption issues in a world with satiated populations
  • Budget issues involving the funding of entitlement programs
  • Taxes, inflation, and further borrowing
  • The possible benefits and limitations of technological solutions to fundamental problems:
  • Biology
  • Energy technologies
  • Information systems
  • Global warming and volatility
  • Economic perspectives on the prospects for significant disruptions due to war and terrorism

Lawrence Eugene Harris Bio

Larry Harris holds the Fred V. Keenan Chair in Finance at the USC Marshall School of Business.  His research, teaching, and consulting address regulatory and practitioner issues in trading and in investment management.  He has written extensively about trading rules, transaction costs, and market regulations.  His introduction to the economics of trading, Trading and Exchanges: Market Microstructure for Practitioners (Oxford University Press: 2003), is widely regarded as a “must read” for entrants into the securities industry.  Chairman Harvey Pitt appointed Dr. Harris to serve as Chief Economist of the U.S. Securities and Exchange Commission in July 2002 where he continued to serve under Chairman William Donaldson through June 2004.  As Chief Economist, Harris was the primary advisor to the Commission on all economic issues.  He contributed extensively to the development of regulations implementing Sarbanes-Oxley, the resolution of the mutual fund timing crisis, the specification of Regulation NMS (National Market System), the promotion of bond price transparency, and numerous legal cases.  Harris also directed the SEC Office of Economic Analysis in which 35 economists, analysts, and support staff engage in regulatory analysis, litigation support, and basic economic research.

Professor Harris currently serves on the boards of Interactive Brokers, Inc. (IBKR), the Clipper Fund, Inc. (CFIMX), and CFALA, the Los Angeles Society of Financial Analysts.  He also serves as research coordinator for the Institute for Quantitative Research in Finance (the Q-Group).  He is a former associate editor of the Journal of Finance, the Review of Financial Studies, and the Journal of Financial and Quantitative Analysis.  Other professional service has included year-long assignments to the U.S. Securities and Exchange Commission and to the New York Stock Exchange immediately following the Stock Market Crash of 1987.  Dr. Harris has also worked at UNX, Inc., an electronic pure agency institutional equity broker, and at Madison Tyler, LLC, a broker-dealer engaged in electronic proprietary trading in various markets.

Dr. Harris received his Ph.D. in Economics from the University of Chicago in 1982.  He also is a CFA charterholder.