Market Leaders Pick Their Market Leader: Who is the economist with the sharpest eye in the Square Mile?
Wednesday 10 March 1999
Chief UK economist
YOU NEED several qualities to stand out in the City. You require a distinctive view in financial markets and you have to outperform your fellow economists. It is important to be able to communicate your point; to market your view. But it is best not to go too far and become something of a sensationalist.
I am reminded of Frank Sinatra's view that success in showbiz is down to 95 per cent luck and 5 per cent talent - but don't bother trying if you haven't got the talent. For economists, it is important to have the talent, but the other 95 per cent is your firm and your marketing of yourself. Obviously you've got to be a brilliant economist, too.
I nominate Tim Congdon for his sheer intellectual honesty and the fact that he consistently makes good calls on the market. I cannot miss out Gavyn Davies, partly because he thinks the same way as me, but also because he is very good at applying solid economics to practical issues.
Chief international economist
EXCLUDING MY current colleagues, I would like to nominate David Morrison and Jeremy Hale, now at Paribas. Having long worked with both of them, I can attest to their outstanding talents. Another former colleague, Sushil Wadhwani, at Tudor Investment, is a superb economist who has written an outstanding - if pessimistic - study of the bull market in US stocks for the National Institute.
Also, on the buy side, I have always admired both Bill Martin of Phillips and Drew, and Michael Hughes of Barings.
Finally, how can one overlook the magnificent Mervyn King at the Bank of England, the toughest competitor that private sector City economists (fortu- nately) never had.
Lombard Street Research
I AM particularly in sympathy with Paul Turnbull at Merrill Lynch and David Smith at Williams de Broe. Like Gordon Pepper in the 1970s, they recognise that the behaviour of the money supply is crucial to the economic outlook and have a good forecasting record to prove it.
Gavyn Davies is, of course, unique. Not only is he highly rated by the institutions, but he also has immense influence with the present Government. His work is always comprehensive, well-argued and intelligent, although I am not sure he has really understood the crucial role of money and banking in the economy.
Barings Asset Management
There are people who work well for the non-financial, non-City client; there are those who are ideal for the trading desk; and there are those whose work particularly suits the strategists, the fund managers.
For the client who is not enormously financially clued up, I would say that Roger Bootle is the perfect City economist thanks to his excellent communication skills.
For the traders, it is important that the economist is able to establish a fair value for the financial markets. Gavyn Davies and Tim Congdon are particularly good at this. For the fund-manager audience, their economist needs to have a very good feel for and be a particularly good judge of the market. Tony Plummer at Guinness Flight Hambro is a fine example of this type of economist.
AN ECONOMIST I greatly admire is Tim Congdon of Lombard Street. His qualities are multifarious: he is original, forthright and completely unafraid of differing from the consensus.
If you are managing money, it is important to listen to a spread of independent ideas from people who are capable of taking a radical view. My nominee fits into this category. He may get it wrong sometimes but, if I were managing money, I would want to listen to him.
Former chief economist
I ADMIRE two or three economists for different reasons. There is Brian Reading at Lombard Street whom I admire for his thought-provoking idiosyncratic approach. He always comes up with interesting ideas. I do not agree with him on some things, though, particularly Europe. But he is always worth reading on international financial issues.
I also single out Richard Portes of the Centre for Economic Policy Research, who singlehandedly regenerated work on European and UK policy issues. He stands out because he is able to apply acade- mic work to economic policy. Furthermore, he is interesting and useful to the decision makers.
IF I HAD to nominate two economists who stood out from the crowd, I would choose Martin Brookes of Goldman Sachs and Tim Congdon of Lombard Street.
I choose Martin because he is bright, insightful and one of the more thoughtful economists I know. He likes to look at the bigger issues and long-term picture. As for Tim, he, too, is a man who engages in the wider picture. Equally important, his reports are interesting. Funnily enough, I rarely agree with him and I do not admire him ideologically but, as a City economist, he is worth reading.
Head of Treasury Research
Royal Bank of Scotland
FIRST AND foremost a good City economist must be a good economist. Lehman's have a good team, with global chief economist John Llewellyn and Russell Jones in Tokyo. I would also cite Gerard Lyons of DKB and James Stewart of Weavering Capital. Some economists can suffer from analysis paralysis and a failure to reach a conclusion. The City requires its economists to have a view. A strong framework to make sense of the world helps.
Tim Congdon at Lombard Street Research has been a leader in promoting the importance of the money supply as an indicator.
THERE ARE three City economists who stand out immediately. The first is Gerard Lyons who is quite a good economist who has steady judgement. Then I'd pick out Avinash Persaud from JP Morgan. He is a very fine communicator, which is essential for the economist.
A particularly valuable attribute is the ability to pick out key trends, and Peter Wann of Cazenove certainly has this.
WELL THE only true objective assessment of how competent an economist is would be the surveys of the client base, such as the Extel and Reuters ones. They tend to be really ruthless measures of performance. But getting it right in terms of forecast numbers is not the end of the game. Really it's barely even the start.
For me, the places with the best City economist teams are Merrill Lynch and Dresdner Kleinwort Benson. These are the economists who rate consistently and solidly in the surveys. If I were to have to pick a team of economists I'd pick either Merrill Lynch's, led by Paul Turnbull, or DKB's, led by David Owen.
I pick DKB because everything they do, they do well. Their clients are immensely pleased with their work. Merrill Lynch stands out for the accessibility of the reports. They are easy to read and easy to digest.
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