Thomas Piketty’s book ‘Capital in the 21st Century’ became a surprising bestseller earlier this year. It documents the increasing concentration of income and wealth in a few hands. And it raises the important concern that, because the rate of return on capital investment exceeds the growth of the economy, we face a future division of society into the ‘haves’ and the ‘have nots’ based on inherited wealth, with a return to the social conditions and class divide of Europe in the 19th century.

But, while there has certainly been an increasing concentration of wealth in recent years, it has little to do with high returns on capital investment, especially with high returns on investing inherited wealth. The fortunes of roughly 70% of those in the Forbes list of the richest 400 US citizens are self made. We are talking about people like Bill Gates of Microsoft, Mark Zuckerberg of Facebook, George Soros of the Quantum fund or Henry Kravis of KKR. (read more…)

The U.S. economy has made steady progress since last year, registering an average score of 59 on the Bank of America Merrill Lynch 2015 CFO Outlook survey. This is an increase of six points from last year on the 100-point index, with 100 representing an exceptionally strong economy.

The survey tallies responses from 603 financial services sector executives for firms with revenues between $25 million and $2 billion. Most participants reported a bright outlook for their companies.

“With a steadily improving economy as a backdrop, growth is top of mind for CFOs in 2015,” said Alastair Borthwick, head of Global Commercial Banking at Bank of America Merrill Lynch. “Companies are moving from maintaining their position to growing in earnest by hiring new employees and taking steps to expand.”

Fifty-two percent of survey respondents expected their companies to hire more full-time workers in 2015, the first time in seven years that metric has risen above 50%. (read more…)

Gen. Colin Powell, USA (Ret.) and legendary comedian Jay Leno share quite a history. Not only have the two spent a great deal of time together, they have each spent significant time interacting with numerous presidents. Better yet … Powell spent years working for four different presidents, while Leno spent years making fun of them.

Time with Reagan

During a joint appearance during the gala dinner at CME Group’s annual Global Financial Leadership Conference this week in Naples, Fla., Leno tried to lure Powell into revealing which of his former bosses was the best leader. Powell was too savvy to take the bait, saying each president had their own unique leadership styles. However, Powell did say he had a special place in his heart for former President Ronald Reagan. Powell shared tales of not only his most memorable dealings with Reagan in the Oval Office, but also one very special visit Powell paid to Reagan at his home in California after he had left office. (read more…)

When it comes to systemic risk, experts at CME Group’s 7th annual Global Financial Leadership Conference remain skeptical about whether policymakers have the right tools, let alone know what to do with them.

Kevin Warsh, a former member of the board of governors at the Federal Reserve, said he is concerned about huge burden being placed on macroprudential oversight, especially considering there is no academic research or history on how to do it. “We are running an experiment we have not run before,” Warsh explained.

MIT professor Andrew Lo said it is not clear that the Federal Reserve’s tools are fit to deal with systemic risk problems because the very nature of systemic risk also continues to evolve. Lo explained that from an academic and policymaking perspective, the financial crisis is the “gift that keeps on giving.”

The creation of the Office of Financial Research was one of the key successes of Dodd-Frank. (read more…)

Terry Duffy is the Executive Chairman and President of CME Group, which is hosting its annual Global Financial Leadership Conference next week in Naples, Fla. Mr. Duffy chatted with SmartBrief and shared more background on the GFLC.

1. The Global Financial Leadership Conference is now in its 7th year … How has the event evolved?

The GFLC has come a long way in its short history. Our goal in developing the conference was to provide a venue for some of the brightest minds in business, economics, media and politics to have a dialogue about current issues and risk in our global economy. To do that, we created an event that brings together decision makers from the world’s leading financial institutions to discuss emerging geopolitical trends, debate critical economic issues and provide perspectives on future developments in the global marketplace – those decision makers have included Presidents George W. Bush and Bill Clinton; British Prime Ministers Tony Blair and Gordon Brown; and Secretaries of State Hillary Clinton, Condoleezza Rice and Madeline Albright just to name a few. (read more…)