1. A Global House of Debt? 2016 Economic Outlook
Professor Amir Sufi

2. Not Forecast Mistake, Forecast Bias: World Bank Forecasts Too Optimistic

4. Household Debt and Global Growth

5. Emerging Market Debt Binge: Brazil
WSJ: 2013:
“Most people think of Brazil as a poor country that lives or dies on sales of commodities. But aspiring shoppers fueled much of the country’s recent boom, as consumer loans more than doubled in five years”
2016 growth forecast by World Bank reduced by 2.4 percentage points between 2014 and 2015
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6. Emerging Market Debt Binge: Kazakhstan
FT: 2014:
“Something strange is happening in Kazakhstan. Over 12% of consumer loans are non-performing and yet the banks are dishing out more consumer credit than ever. Lending increased 37% between July 2011 and November 2013.”
2016 growth forecast by World Bank reduced by 1.8 percentage points between 2014 and 2015
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7. Borrowing Too Much = Big Trouble

8. Risk Premium Shift

9. When the Credit Market and Stock Market Disagree, Who is Right?
quarter
S&P 500 return
Change in High Yield Spread
Subsequent quarter S&P 500 return
1997q4
0.024
0.370
0.135
1998q2
0.029
0.540
-0.103
2000q1
0.020
0.990
-0.029
2004q1
0.013
0.230
2005q2
0.009
0.330
0.031
2005q4
0.016
0.110
0.037
2006q3
0.052
0.070
0.062
2007q2
0.058
0.090
2007q3
1.270
-0.038
2013q2
0.360
0.047
2014q3
0.006
0.870
0.044
2014q4
0.640
0.004
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10. End of 2015: Disagreement, with Credit Market Winning in 2016 So Far!
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11. Pressure on Fed: Weak Global Economy
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12. Pressure on Fed: Yield Curve
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