Clark Winter is no slouch when it comes to piecing together massive and disparate pieces of global economic data. As the chief global investment strategist for Citigroup Private Bank—which manages more than $100 billion in equity capital and trust-preferred securities—Mr. Winter is constantly under the gun to guide the company’s investment management strategy in the 33 countries in which it operates.
That means paying close attention to subtle shifts in economic figures as well as political trends that often shape public markets. Each month, Mr. Winter also writes a column in The View, Citigroup Private Bank’s global investment publication. Red Herring got his views on global economic issues—from the weak dollar to the vagaries of oil supply and the outlook for the technology economy.
Red HerringQ:The weak U.S. dollar has increasingly been a topic of discussion. How do you see it impacting the global economy?
A: For the last 50 years, Americans have woken up most days without having to worry about the dollar’s rise and fall. But if you went to Europe prior to 2002, every single country woke up every single morning worrying about their currency valuation. If you go to Asia, everybody worries every day. In fact, when I travel in Asia and the Middle East, two-thirds of the questions I get relate to currency. When I travel in the U.S., the question never comes up.
Q:Hasn’t the rising euro and sliding dollar caused problems for Europeans?
A: For exporters in Europe, the declining dollar and the rise of their own value currency has begun to cause great pain. Where has that pain been felt? In their margins. Americans have not felt very much pain yet. The big irony is the devaluation of the dollar didn’t come up in the presidential debates, the State of the Union [address], or the inaugural address. No candidate thought there were any votes to be gained by bringing attention to it.
Q:What can the U.S. Federal Reserve do?
A:Over the past 22-year period, Washington has had three stimulus components available: executive, monetary, and legislative. One in the form of endless tax cuts, the other in the form of endless interest rate cuts. Since early [in Reagan’s presidency], there has been yet another round of interest rate reductions and tax cuts available. And each president has nicked away at that iceberg. Now it is over.
Q:What about the role of technology?
A: There was also the greater productivity enhancer called tech. Anybody who figured this out made a lot of money. Now we have the opposite situation—you have no ability to further reduce rates, no ability to further reduce taxes. But you do have incredibly improved technology coming out into the market. Tech is probably the only productivity tool out there for everybody who is smart enough to figure out how to use it.
Q:Who has benefited the most from the weak dollar?
A:The major benefactor of all this dollar weakness is not the U.S. economy, but the Asian economies. They have kept their hard or soft currencies pegged to the dollar. And they are ever increasing their export competitiveness. We used to think that Asian economies were driven by heavy manufacturing and labor-intensive work. We’re now seeing that countries like China want to climb the food chain.
Q:How does the issue of global oil figure into the outlook for the tech economy?
A:China’s per-capita consumption of oil is on the verge of going vertical. The predictions are that their per-capita consumption is going to cross ours at around 2015 or 2020. By the way, so is
India’s, and so is the rest of the world’s. We are smart enough citizens of the early 20th century to recognize that it can’t go on forever. Something has got to give.