Problems threaten from almost every direction: the fiscal cliff looms, the U.S. Presidential Cycle is upon us, Europe’s troubles are clear for all to see, China appears to be slowing…indeed, the possibility of a global recession is non-egligible.

Well-known and respected observers have publicly voiced their concerns. For instance, Howard Marks of Oaktree Capital recently wrote, “The world seems more uncertain today than at any other time in my life.”

John Bogle has said, “The economy has clouds hovering over it…And the financial system has been damaged.”

Economists have come up with measures of uncertainty that combine things like the number of newspaper stories about uncertainty with the spread of economists’ forecasts into a single measure. Exhibit 1 shows an example of this kind of index, and a cursory glance confirms the situation outlined above: the one thing we have been certain of is that uncertainty is high!

To read the white paper, click here.

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