Guest Speaker: David Ranson, US Economic Resilience and Stockmarket Sector Bets

Guest Speaker: David Ranson, US Economic Resilience and Stockmarket Sector Bets

Except during the Great Depression, which was a highly abnormal period, the US economy has bounced back quickly from many drastic short-term declines in real GDP. An economic downturn is a sufficient, but not necessary, condition for a major fall in stock prices. However, a major fall in stock prices is not a sufficient condition for an economic downturn. Indeed, during a period of turbulence and panic the stock market is virtually disconnected from the economy.

A much more faithful leading indicator of economic strength and weakness is the corporate spreads market, which is uncorrelated with equity prices in the short term especially during such "disconnect" periods. As of mid-March, this indicator suggests that the economy bottomed sometime around January and is back on a growth track at least through mid-May. Sector rotation in the stock market is very sensitive to this same indicator with a lead time of one year.

Biography: R. David Ranson, President and Director of Research, H.C. Wainwright & Co. Economics, Inc.; South Hamilton, MA

R. David Ranson is the president of H.C. Wainwright & Co. Economics, Inc., an investment research firm near Boston, Massachusetts. Prior to becoming a general partner of Wainwright in 1977, Mr. Ranson taught economics at the University of Chicago Graduate School of Business. He has been an assistant to then Treasury Secretary William E. Simon, and a member of George P. Shultz’s personal staff at the Office of Management and Budget. Prior to his service in Washington, he was a member of the Boston Consulting Group. David Ranson has addressed audiences and published articles on a wide range of economic and investment topics, and has provided testimony to a number of Congressional committees. His work has also appeared in The Wall Street Journal, The New York Times, The Christian Science Monitor and other publications. He holds M.A. and B.Sc. degrees from Queen’s College, Oxford, and an M.B.A. in finance and a Ph.D. in business economics from the University of Chicago.

Background: HC Wainwright Economics, Inc.

Founded in 1978, Wainwright Economics is a Boston-based investment research and strategy firm specializing in the objective, quantitative use of market prices to forecast the Fed, the business cycle, earnings, equities (including various styles, such as value vs. growth and large-cap vs. small-cap), industry rotation, bonds (corporate and government) and currencies worldwide.Economics, Inc.
Wainwright Economics is in business to help the institutional investment community in devising effective investment strategies through intelligent use of market data and superior understanding of how markets have behaved over time.

In a nutshell, we identify and quantify financial prices that demonstrate predictive correlations with movements in a variety of capital markets. We offer our investment clients significant, accurate and timely information––often at odds with Wall Street’s views––on turning points in the business cycle and the performance of asset classes. While the term “economics” is in our name, we do not rely on the traditional economic statistics that engage so many Wall Street economists.
Our research focuses on:

• asset allocation
  
• interest-rate behavior
  
• industry rotation and style bets in the U.S. equity markets
  
• international markets and currency movements

In seeking higher returns, investors must cast their nets ever more widely. At the same time they are well aware that higher risks accompany the greater opportunities. The purpose of Wainwright’s research is to identify through empirical analysis the best leading indicators of economic and financial performance. We provide this information to investors who use it to enhance expected return while at the same time reducing risk.