Nicholas P. Sargen Knihy

In the wake of the 2016 U. S. presidential election, investors and the electorate alike are seeking clarity on a wide range of macro policy issues that will impact the economy and markets in the years ahead. The primary goal of this book is to provide an objective source for investors to learn about economic policy issues that surfaced. Topics include long-term growth, the federal budget deficit, healthcare reform, tax reform, regulatory policies affecting the financial system and environment, the nexus of monetary, exchange rate and trade policies, and globalization. The book explains how these issues have evolved, considers arguments from both sides of the political divide, and draws upon evidence from studies by experts in the respective areas. A related goal is to assess the likely impact of economic policies on financial markets. While the presidential election was close, the markets’ response was decisive: U. S. and global equity markets went on a tear as consumer and business confidence soared. This surprised many investors who believed a Trump victory would be bad for financial markets. It also caused many to question whether expectations embedded in markets were too optimistic. Sargen’s assessment is presented in the opening and concluding chapters. 

The narrative explores JPMorgan's transformation into a universal bank during the 1980s and 1990s, detailing the challenges faced by leaders Lew Preston and Dennis Weatherstone amid the developing country debt crisis and shifting borrower behaviors. It highlights the firm's strategic adaptations leading up to its acquisition by Chase in 2000, while also situating JPMorgan's evolution within the broader context of U.S. banking consolidation and the influence of current management under Jamie Dimon.

Written from a practitioner’s perspective, this book provides a toolkit and guiding principles for managing money during market turmoil. It includes ten case studies, starting with the collapse of the Bretton Woods fixed exchange rate system and extending to current concerns about China as a potential bubble. Each chapter examines how crises or bubbles developed, the responses from policymakers and markets, and optimal portfolio strategies. The aim is to share experiences and lessons learned, equipping investors for future shocks. The opening chapter investigates common patterns in interest and exchange rate movements that investors might exploit, presenting a conceptual framework that explains these patterns for traditional currency crises but not for asset bubbles. The concluding chapter connects the various episodes and discusses how financial crises have evolved since Bretton Woods, highlighting challenges for policymakers and investors in detecting asset bubble problems in advance. Importantly, investors have a second chance to outperform during oversold markets, but they must devise a strategy to mitigate damage during sell-offs and capitalize on eventual recoveries.