Ed Hyman, Chairman of Evercore ISI and head of the firm’s Economic Research Team, shares with DoubleLine’s Jeffrey Sherman and Samuel Lau the macroeconomic insights he believes are most relevant to investors at this time. This episode of The Sherman Show was recorded June 29, 2020. With inflation a no-show on the foreseeable investment horizon, Mr. Hyman is focused on three variables, all of which are global: fiscal and monetary stimulus, the COVID-19 pandemic and the economy. In his view, the massive quantity of stimulus “has the upper hand over the virus,” although he warns that the possibility of more lockdowns cannot be ruled out. In response, Mr. Sherman notes, “It seems that the market has ignored the increase of the virus as of late and seems to really be focused on what you’re talking about: this commitment to keep things going, to keep the economy going.”
Among other topics, Mr. Hyman and the hosts discuss behavioral shifts caused by the pandemic and government measures in response. “I assume that working in an office will be less attractive for a long time, and working from home will be more attractive,” Mr. Hyman says. “So house prices away from downtowns are going up.” He is optimistic about the prospects for an effective COVID-19 vaccine next summer. Modern Monetary Theory (MMT), the idea that governments can create an economic free lunch by issuing debt for purchase by their central banks, also comes up. “Most of the MIT guys or the Harvard guys find MMT to be pretty lacking in credibility,” Mr. Hyman says. “But it seems to me as a practical matter, it definitely has the upper hand at the moment. It just seems like there’s no limit to monetary or fiscal stimulus initiatives – as long as it seems that there’s a need for them.”
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