- Bonds pared their year-to-date gains, as improving economic expectations drove yields higher in November.
- Small cap equities rallied, while large caps didn’t move appreciably during the month. International equities faltered as Euro-area debt fears persisted and instability in the Korean peninsula created anxiety.
- Economic growth was revised higher for the third quarter, but future growth expectations were revised lower by the FOMC.
- Interest rates rose in November with the rollout of QE2. Meanwhile, the objects of the Fed’s dual mandates each deteriorated further: core inflation reached a historical low, while the unemployment rate rose.
Mere intellectual play?
Economists, among other things, seek to postulate probable outcomes based on their analysis of past and present economic data sets, and there’s many a joke that picks at the reliability of said postulations. Most have heard the one about why economists were created – to make weathermen look good (with our apologies to both the meteorologists and economists). In today’s mass media world, there is no absence of hypotheses surrounding the array of possible outcomes given our ambiguous economic environment. Moreover, there is no shortage of economists on each opposing side of the fence justifying their stance. In the midst of these theorized outcomes, however, a quote from Immanuel Kant, a German philosopher, seems all too fitting.
“Experience without theory is blind, but theory without experience is mere intellectual play.”