TD Ameritrade National Conference

Several members of our firm attended the TD Ameritrade (the new name of the merger of TD Waterhouse and Ameritrade) annual advisors conference last week. This was one of the best conferences I have ever attended, and I want to share excerpts of a number of speakers, but I want to comment on the speech by Dr. Alan Blinder first. Blinder's comments were of interest for three reasons: 1. He is one of the Democratic Party's heavyweight thinkers on the economy; 2. He was the vice-chairman of the Fed during the Clinton years and thus has keen insights into the thinking of outgoing Fed Chairman Alan Greenspan; and 3. He has worked closely with Ben Bernanke, the new Fed Chairman, while both were professors at Princeton University. My key interest in Dr. Blinder's comments were his views on the economy. I was pleasantly surprised to hear that he agrees with most economists that 2006 GDP growth will be in the range of 3.5% - 4%. That is actually higher than DCM's estimate of 3%. He thought the recently announced fourth quarter reading of 1.1% annual growth was a fluke that would be compensated for by higher than trend growth in the first quarter. He was asked about the balance of trade issues with China and other countries. He said that David Ricardo 200 years ago theorized and history had proved that foreign trade is not destructive to job creation. He said if the US were truly exporting jobs, then how could the unemployment rate be only 4.7%. He said the theory of comparative advantage currently says that the most efficient and cost effective place to produce televisions was in Asia, and the best place to produce airplanes was the US. He said you disrupt and weaken an economy by trying to hang on to inefficient and non-competitive industries and jobs. He did not say it, but the outsourcing of manufacturing jobs has been going on for 40 years, and the rise in manufacturing outside the US has caused jobs in shipping, transportation, and warehousing to skyrocket. You could walk across the US on a busy day on the trailer tops of 18 wheelers. He had harsh things to say about the budget deficits and called on President Bush to abandon his efforts to make permanent the tax cuts instituted in 2001 and 2003. I had the very strong sense, however, that if President Clinton would have been in office on 9/11, Dr. Blinder would have recommended tax cuts to spur the economy and consumer confidence. In summary, I have followed Dr. Blinder for many years and found him to be a reasonably main stream economist. He takes a populist line from time to time, but I do not believe he harbors notions that the government creates jobs or can do much to stem the free flow of capital. If John Kerry would have won the Presidency, I am reasonably certain Dr. Blinder would have been on his shortlist to replace Dr. Greenspan. I am much happier that Dr. Bernanke is the new Fed Chairman, but I think the markets would have been OK with Dr. Blinder. Next, I'll detail some of Dr. Blinder's thoughts on Ben Bernanke. PS: We obviously were interested in what the merger of TD Waterhouse and Ameritrade would mean to our clients and us. We had previously been told that the TD Waterhouse Institutional Services'management team would take the lead in custodial services to money managers such as Donaldson Capital Management. That was confirmed in Orlando. As a result, I see few if any changes in the near term. odds & ends