We recently chatted with Tom O'Gorman, Senior Vice President, Director of Franklin Bissett Fixed Income, at Franklin Bissett Investment Management. Via the flattening of the yield curve the bond market has been expressing doubts about the economy, so we asked Tom O'Gorman to share his outlook, his perspectives on the market, and his thoughts on perception versus reality. Is the bond market right about the economy?
In part 1, Tom O'Gorman talks about Canada, and that he expects a material slowdown in the Canadian economy, that the slower growth that characterized the latter half of 2017 was a more accurate reflection of Canada's economy. He also points out that the BoC may have moved too quickly, and why that's problematic.
In this segment of our discussion about the economy and market, Tom O'Gorman points out that while there is definitely inflation within financial market prices, its not clear whether there is real pricing and goods inflation. The Fed has two mandates - price stability and full employment, however, he says "Inflation was higher 3 or 4 years ago when the Fed was doing QE, than it is today."
Was the GDP consumption pop that occurred in the latest year, driven by wage growth or credit - he says there is no sign of wage growth, so his/their thesis is that consumption has been driven by taking down the savings rate and/or borrowing; there was a massive amount of growth in consumer credit over the 2017 period, while the savings rate is being drawn down to near-record low levels. Tom O'Gorman asks "Is this sustainable?"
Are central banks caught between a pillar and post of conflicting views on inflation? What lies ahead? Our conversation continues.
Is it possible that China's Forex reserve bond buying, which has resumed very strongly in the second half of 2017, may be the de facto source of liquidity, the White Knight of the Fed's unwinding of QE as it turns down the volume on it's bond purchase program.
In this segment of our conversation we discuss the areas of opportunity in the bond market that Tom O'Gorman and Franklin Bissett Fixed Income are currently favouring.
Where are the Fixed Income Opportunities in a rising interest rate environment?
Thank you for listening.
About Tom O'Gorman
Tom O'Gorman, CFA, Senior Vice President, Director of Franklin Bissett Fixed Income, Franklin Bissett Investment Management.
Tom O'Gorman is a senior vice president, director of fixed income at Franklin Bissett Investment Management and has been with the organization since 2010.[dynamic-0012]
Mr. O'Gorman shares co-lead responsibilities of Franklin Bissett Income Strategy Development and Implementation, including Franklin Bissett Core Plus Bond Fund (2010), Franklin Bissett Institutional Fixed Income Program (2010), Franklin Bissett Canadian Balanced Fund (2011), Bissett Canadian Core Bond Trust (2012), Franklin Bissett Strategic Income Fund (since inception), Franklin Bissett Canadian All Cap Balanced Fund (2013) and Franklin Bissett Monthly Income and Growth Fund (since inception).
Prior to joining Franklin Bissett, Mr. O'Gorman spent 20 years managing U.S. and Canadian fixed income. He spent 10 years with Prudential Financial as an analyst and was the head of portfolio management for Munich Re in NYC for 10 years, overseeing a $30 billion portfolio of Canadian and U.S. fixed income assets.
Mr. O'Gorman studied at Berklee College of Music, holds a bachelor's in business administration from William Paterson University and an MBA from Rutgers University. He is a Chartered Financial Analyst (CFA) charterholder.