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GEM lecturer participates in an Economic roundtable hosted by The Denver Post

May 22, 2013

The Denver Post hosts an investment roundtable.

Michael Orlando Economist Economic Advisors (Kathryn Scott Osler, The Denver Post)

GEM lecturer Michael J. Orlando, PhD, who is also an Economic Advisors Principal Consultant and Adjunct Professor of Finance at Tulane University, recently participated in an Economic roundtable hosted by the Denver Post.

Orlando was one of four local experts who discussed themes investors should be watching in the months ahead. He enjoyed being a part of this great panel and found the other participants’ comments quite insightful.

“I think we generally agreed that the economic recovery would continue at a sluggish pace for the foreseeable future,” Orlando said. “And, we all identified risks associated with sluggishness in overseas markets. I was probably the least concerned with inflationary risks. One panelist cautioned against reaching for returns in long-term, high-yield credit markets, but suggested that shorter-term instruments were worth the risk. I thought that was very useful guidance.”

Orlando began his career with Shell Oil Company providing reservoir engineering and economic evaluation expertise for oil and gas exploration and development projects in the Gulf of Mexico. Dr. Orlando’s research spans a range of topics in applied microeconomics. He has published work on corporate governance, financial regulatory policy, the economics of payments networks, the geography and industrial demography of innovation, and energy and environmental policy. He is also a practiced teacher and has developed courses in economics, finance, and energy business strategy. Furthermore, he has co-authored a textbook on money and banking.

Below is a portion of the Denver Post article that features Orlando. Read more: Economics experts: Watch interest rates, and stick with equities – The Denver Post

Economics experts: Watch interest rates, and stick with equities

The Denver Post hosts an investment roundtable.Economic roundtable hosts, from left, Charlie Farrell, Sandy Rufenacht, Michael Orlando and Michelle Gibley respond to questions as The Denver Post’s Aldo Svaldi moderates. (Kathryn Scott Osler, The Denver Post) 

After racing higher in the first quarter, U.S. stock markets turned volatile in April, raising concerns that a spring slump, if not something worse, might take hold for the fourth year in a row. The Denver Post assembled a panel of four local experts last week to discuss some themes investors should be watching in the months ahead. They were Charlie Farrell, CEO of Northstar Investment Advisors; Sandy Rufenacht, chief investment officer of Three Peaks Capital; Michael Orlando, an economist with Economic Advisors; and Michelle Gibley, director of international research with Charles Schwab.

The roundtable was open to the public, and some audience questions are included. Below is an edited version of the discussion.

The Post: I want to get your thoughts on where things are headed. Are we at a turning point, or do stocks have more time to run?

Farrell: It’s been a nice year already, so if you just ended it right here, that would be a pretty good return. You’re most likely not going to predict a turning point. Stick with the fundamentals in your portfolio. I think the environment is OK, and you should expect some OK markets.

Rufenacht: The fixed-income markets have had a lot of the upside wrung out of them. The money flows, frankly, have to go somewhere, and it’s in equity markets. I think it ends up being a pretty good environment, given that corporation after corporation is pretty healthy.

Orlando: I’m the dismal scientist, so I’ll always say the most negative thing. I don’t know what we can expect out of equities in the current environment when fundamentals are this soft. They’ll probably continue to plug along. When you look at what has done well very recently, it has been noncyclical stocks. In an expansion, you would expect people, investors, to throw their money into cyclicals to really get some leverage as the economy takes off. They’re not going for the stuff that would traditionally grow — that’s because they don’t expect it to really grow.

Gibley: In the near term, a pullback for stocks seems somewhat likely because the market is near a record high right now and yet the economic data coming in is a little soft. People were thinking maybe this will be the fourth straight year we’ve had another soft patch. But some factors this year mitigate. The first is that the housing recovery is really in a lot better place. A year ago, everybody was getting concerned about Greece and a breakup of the euro, and now people aren’t really talking about that. Thirdly, and this might sound a little funny, the political rancor in Washington is actually a little bit less than it was. Stocks have the ability to participate when economic growth reaccelerates, which we believe will happen.

The Post: Gold prices cratered earlier in April, and commodities softened. What do you think is driving that?

Gibley: Gold is kind of tricky to value because there aren’t any cash flows associated with it. China is roughly about 40 percent of demand for most commodities, so if China is slowing, it really has a big impact. Another thing that’s hurt prices for commodities overall is the increase in the dollar.

Orlando: In some respect, this is a concession by speculators on inflation. They are finally conceding some ground. There’s been a lot of rancor over monetary policy — that we’ve kept it too low, that we’re going to see inflation blow up. It’s just not happening.

Rufenacht: Gold is not being used as the inflation hedge that it’s typically used for.Farrell: It just illustrates the market is very trigger-happy, so with the slightest little adjustment in perception, we can see prices change really quickly. Just don’t overreact, OK?  


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