December 26, 2016


Top Bond Manager Woolnough Rebounds With Bullish Call on Economy (Sarah Jones, December 21, 2016, Bloomberg)

Listening to Richard Woolnough talk about the economy, you wouldn't think he's a bond manager.

Woolnough, whose 15.5 billion pound ($19.2 billion) M&G Optimal Income Fund has beaten 83 percent of peers over the past five years, says low interest rates are working, economies are recovering, and investors have gotten too worked up about macroeconomic risks. He's so bullish, he started buying equities for the first time in two years, saying they're more attractive than bonds.

"There are no headwinds and you need a headwind to slow the economy down," he said in an interview from M&G's headquarters in London.

The world has never been a better place. Don't believe us? Look at this chart (Keith Breene,  22 Dec 2016, World Economic Forum)

This chart shows that back in 1820, the vast majority of the world's population lived in extreme poverty. That remained the case right through the first half of the 20th century.

After the Second World War, as the global population started to grow rapidly, so did the number of people in extreme poverty.

Around 1970, though, something fundamentally changed: as the population continued to grow, the number of people living in extreme poverty started to fall, and has been on a downward trajectory ever since. Around 2010, the figure dropped below 1 billion for the first time.

Extreme poverty is defined as living at a consumption (or income) level below 1.90 international dollars per day. International dollars are adjusted for price differences between countries and for price changes over time.

The progress of the past 200 years was achieved as economic growth brought higher incomes to more and more people in the world.

With the onset of industrialization and rising productivity, the share of people living in poverty has been decreasing, and continues to do so as further economic growth brings greater wealth.

Posted by at December 26, 2016 1:15 PM