MATH Briefing - The Impact of the Fed's Tapering Strategy on Global Markets

October 28, 2013

MATH (Markets And The Hill) Briefing Series
Capitol Hill, Washington, D.C.
By invitation only


The surge in the Fed's balance sheet from $800 billion in September 2008 to almost $4 trillion currently has distorted global financial markets through the maintenance of near-zero interest rates, and through pushing investors - including households - to take on excessive risk to earn better returns. As a result, equity prices are higher than they would have been had only fundamentals mattered, bond yields are lower across the credit-rating spectrum, and there has been a troubling resurgence of covenant-light debt issuance. Internationally, emerging markets have benefited and suffered from the large and volatile capital flows that at times are driven more by Fedspeak than by global fundamentals. This briefing will address the most important medium-term impacts on global markets of the Fed's policy, the risks of prolonging near-zero interest rate/quantitative easing policies, and the associated pro and cons of the Fed's exit options.


Jason Cummins is the head of research and chief U.S. economist for Brevan Howard, which he joined in 2004. He develops the firm's outlook for the economy, politics and markets, advises the traders on portfolio management and manages the global research team. Cummins is also a member of the U.S. Treasury Borrowing Advisory Committee, a government-appointed panel of external experts that has served the country for almost half a century. Formerly, he was a senior economist at the Federal Reserve Board, where he ran the macro forecasting team. Cummins began his career in 1995 as an assistant professor of economics at New York University and also taught at Harvard University. He received a Ph.D. in economics from Columbia University and graduated with high honors from Swarthmore College.

John Makin is a resident scholar at the American Enterprise Institute, where he studies the U.S. economy, monetary policy, financial markets, corporate taxation and banking. He also studies and writes frequently about Japanese, Chinese and European economic issues. Makin has served as a consultant to the U.S. Treasury Department, the Congressional Budget Office and the International Monetary Fund. He spent 20 years on Wall Street as the chief economist and later as a principal of Caxton Associates, a trading and investment firm. Earlier, Makin taught economics at various universities including the University of Virginia. He has also been a scholar at the Bank of Japan, the Federal Reserve Bank of San Francisco, the Federal Bank of Chicago and the National Bureau of Economic Research. The author of numerous books and articles, Makin also writes AEI's monthly Economic Outlook. Makin received his doctorate and master's degree in economics from University of Chicago, and bachelor's degree from Trinity College.

Komal Sri-Kumar is a senior fellow of the Milken Institute, and president of Sri-Kumar Global Strategies Inc., a macroeconomic consulting firm that advises multinational firms and sovereign wealth funds on global risk and opportunities. Before founding his own firm, he was group managing director and chief global strategist of The TCW Group Inc., where he was also the long-time chairman of the firm's Comprehensive Asset Allocation Committee. Prior to joining TCW, Sri-Kumar was senior vice president at Drexel Burnham Lambert and executive vice president of DBL Americas, responsible for country risk analysis. Previously, he was president of the Country Risk Consulting Service, which he founded to advise Big Eight accounting firms and investment and commercial banks on Latin American debt service capacity. Sri-Kumar holds a master's degree from the Delhi School of Economics and a master's and Ph.D. in economics from Columbia University.

Staci Warden is the executive director of the Center for Financial Markets at the Milken Institute, where she leads initiatives on strengthening capital markets, access to capital, financial education and financial-markets solutions, among others. Prior to joining the Milken Institute, she spent six years with JPMorgan in London, where she ran JPMorgan's Central Bank client franchise in Europe, Eurasia and Africa, and two years in New York as part of the sovereign-debt-restructuring deal team. Before joining JPMorgan, she was a director at the Nasdaq, where she led their two initiatives for micro-cap companies, the BBX and the OTCBB. Warden holds a master's of public policy from the Kennedy School of Government at Harvard University, with a concentration in international trade and finance, and has completed her coursework for a Ph.D. in economics from Brandeis University.