TiE-Boston organized a fireside chat with Scott Clemons, Chief Investment Strategist, Private Wealth Management, Private Banking at BBH&Co. Scott joined BBH&Co. in 1990, and has held a variety of investment roles at the firm over the past 25 years. The fireside chat was moderated by Arvind Navaratnam, who works as a diversified portfolio manager at Fidelity Investments. The presentation focused on the economy and financial markets ahead of the 2016 elections. The event was attended by more than 50 members.

Scott started by giving an overall picture of the US economy. 70% of the GDP is based on consumption. One of the reasons the recent recovery has been slow is because the consumers have focused on reducing their debt from 130% to 105% of household income which amounts to approximately $5 Trillion. In the past, people used to save 10-15% of their take-home pay. This was down to about 1-2% around 2008. As such, Paying Down in Debt will be good in the long run.

The thing to watch in the near future is the wage growth number. A modest increase is what one should be looking forward to. However, if the increase is much more, expect the Fed to raise interest rates more aggressively.

The equity market is priced at 22 times the trailing earnings and we have had 4-6 quarters of weaker earnings. As such, even though the overs S&P500 is up for the year, only about 80 stocks within that have beaten the index. Nearly 150 stocks within it are down by more than 20% and are in bear market.

The two factors which control economic growth are labor force growth and productivity. Immigration is not only a social issue but also an economic issue. Reversing immigration will reverse the labor force growth and lead to lower economic growth.

On the effect of Brexit on US economy, Scott mentioned that even if the trade with UK went to zero, its effect on US GDP will be about 0.1%. In terms of US policies, Scott said, “Polices do not solve problems. Policies buy time for the problems to be solved.”

Scott said that he is a long term investor, he and his wife evaluate their holding once every six months and that he is currently invested 85% in equity. On the other hand Arvind is currently on the sideline with nearly 45% in cash. In the short run, it makes sense to look at old companies who have greater control over their destiny.

|