It may be time to scrap the oft-used phrase ‘the new normal.’ So says Marc Seidner of Pacific Investment Management Co.
Q1 2020 hedge fund letters, conferences and more
“Pimco often gets credit for coining the phrase ‘the new normal’ coming out of the financial crisis,” Seidner, the firm’s chief investment officer for non-traditional strategies, said in a webcast Friday organized by Boston College’s Carroll School of Management. “I’m actually getting pretty sick of the phrase.”
Instead, Seidner said, he may try to convince his Pimco colleagues that “maybe we’re heading into what is an old, old normal.”
The way Seidner sees it, investors were “lulled into complacency” over the last decade. The 2010s saw Wall Street’s longest-ever bull market, historically low interest rates and an economy that grew every year.
“Perhaps we’re going back to some sense of old, old normal where we all have to manage through periods of radical uncertainty, where the distribution of possible outcomes isn’t this beautiful bell shaped curve where you can assign succinct probabilities to tail events,” he said.
A Pimco spokesman declined to comment on his remarks.
The phrase ‘the new normal’ is ubiquitous. A news search on Google brings up about 43.6 million results for the term. And it’s unclear who coined it. Former Pimco Chief Executive Officer Mohamed A. El-Erian, a Bloomberg Opinion columnist and Allianz SE chief economic adviser, is credited with using it widely and being a leading proponent of the thesis.
There are also many economic experts who contend the term needs to be refreshed for a new economy of diminished demand and paltry productivity.
In other comments on Friday in Boston, Seidner said the U.S. economy is unlikely to return to levels seen before the coronavirus pandemic until 2022.
Read the full article here by Michael McDonald, Advisor Perspectives
