Weyerhaeuser Is More Than a Housing Play

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The Global 'Super-Rich' Picked Up One Million More Members Last Year

Andreas Rentz/Getty Images

$('.icon-tooltip').tooltip();A million more people joined the ranks of the global super-rich last year, almost a third of them in Asia, as soaring stock markets helped bolster the fortunes of wealthy investors.

The number of "high net worth individuals" climbed by 10% in 2012, taking the total worldwide to 12m, according to research by Royal Bank of Canada and consultancy Capgemini.

Between them, these twelve million people owned assets worth $46.2tn (£29.5tn) – more than three times the entire annual output from the US economy, and a 10% increase on 2011.

A high net worth individual is defined as anyone with $1m (£641,000) or more in "investable assets". The definition excludes the value of a main home and of any "consumer durables" such as cars.

World markets were volatile in the first half of 2012, as the eurozone crisis deepened; but after ECB president Mario Draghi promised to do "whatever it takes" to protect the single currency in July, and the Federal Reserve unleashed a drastic third round of quantitative easing in September, share prices recovered strongly, boosting the wealth of those with investments.

The findings are likely to increase concerns that the benefits of central banks' radical policies to rekindle economic growth have accrued overwhelmingly to those at the top of society, while unemployment remains stubbornly high in many countries and incomes have been under severe pressure.

Britain is home to the fifth-largest group of super-wealthy individuals, according to the report, with 465,000 super-rich individuals, up from 441,000 in 2011.

The wealth report came as the latest UK inflation figures showed that with the consumer price index running at 2.7% in May wages for average British workers have now failed to keep up with prices for more than three years.

Frances O'Grady, general secretary of the TUC, said, "economic stagnation has caused incomes to fall for most ordinary families but the wealth of the super-rich just keeps on growing. Unless this inequality is tackled Britain could experience a pretty joyless recovery, with the majority of the population seeing little or no benefit when economic growth returns."

The US regained its place at the top of the league table in the report, as the home to 3.73m high net worth individuals, up by more than 11.5% on 2011, as the recovering property market helped repair the damage to wealthy investors' housing portfolios inflicted by the downturn of the past five years.

The Asia-Pacific region was just behind the US, with a population of 3.68m super-rich investors – up by more than 9% on the year.

Europe, where the economy of the single currency zone has now been in recession for 18 months, was home to 3.4m high net worth individuals, but saw a smaller rise in their number, of 7.5%, in 2012.

The researchers also sub-divide the millionaires according to their wealth. There was an increase of 11% in 2012 in the number of people classified as "ultra high net worth individuals", the creme de la creme of the super-rich. These 110,000 people are worth $30m or more, and hold assets worth more than $16tn between them.

A middle group of just over a million people, the "mid-tier millionaires", held $10tn-worth of assets between them; and a much larger group of 10.8m people, which the report refers to as the "millionaires next door", held assets worth $1m-$3m.

The data also underlines the stark geographical divide in the distribution of wealth across the world, with just 140,000 of the 12m super-rich living across the entire continent of Africa. That was an increase of almost 10% from 2011; but still fewer than in Italy, Australia or Brazil.

RBC and Capgemini's analysts forecast that the super-rich will continue getting richer, with the total wealth held by this group expected to expand by 6.5% a year over the next three years.

The super-rich emerge from the survey conducted as part of the research as a relatively conservative group. They managed their assets cautiously in 2012, while fewer than half of them said they trusted financial markets; and fewer than 40% trusted regulators.

The authors said the super-rich respondents to the survey, "exhibited a clear bias toward safety and wealth preservation, allocating nearly 30% of their financial wealth into cash and deposits." This careful approach applied to millionaires of, "all ages and wealth levels, suggesting that the overall lower level of trust in the financial markets may be playing a role."

This article originally appeared on guardian.co.uk

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Your Ultimate Preview For The Most Anticipated Fed Announcement In A Long Time

REUTERS/Kevin Lamarque

The whole world has been anxiously waiting for this moment.

The Federal Reserve will wrap up its 2-day Federal Open Market Committee (FOMC) meeting today.

At 2:00 PM ET, it will publish its FOMC statement as well as an update to its economic forecasts.

Then at 2:30 PM ET, Fed Chairman Ben Bernanke will hold a press conference, which will include a Q&A with economics reporters.

Expectations

Economists expect the Fed to announce no change in its benchmark interest rate target, which is currently at 0% to 0.25%.  Furthermore, they expect no change in its quantitative easing (QE) program, which consists of the Fed buying $85 billion worth of bonds each month to keep interest rates low.

However, there is little agreement on when the Fed will begin to scale back its easy monetary policy.

Recently, there has been tons of speculation that the Fed will soon taper, or gradually reduce, QE. This has been the source of volatility in the global financial markets as real interest rates have finally started to make a big up-move.

"There is no direct way to quantify what the market is pricing in for the size of the Fed’s remaining asset purchases," said Bank of America Merrill Lynch's David Woo. But he added that "QE tends to push real yields lower but inflation breakevens higher (Chart 7)."

BAML, David Woo

As such, everyone will listen very carefully for changes in language that may signal if and when tapering will begin. 

In particular, the updated economic forecasts will scrutinized very carefully. Here's  the WSJ's Jon Hilsenrath:

The evolution of these forecasts is a critical issue. Fed officials are unlikely at this meeting to change their $85-billion-per-month bond-buying program—launched to boost growth by pushing down long-term interest rates and pushing up asset prices, and spurring spending, hiring and investment.

But what they say about the economy will send important signals about what they expect to do in the future. If they maintain confidence in their economic forecasts, it could signal they think they're on track to begin pulling back the program later this year.

Here's what Wall Street's top economists expect from the Fed tomorrow (emphasis added):

Goldman Sachs' Jan Hatzius: "While Chairman Bernanke is likely to reiterate in the post-statement press conference that the QE tapering decision is data dependent, we expect him to dissuade markets from frontloading too much of the entire monetary tightening process—not just the end of QE but also the normalization of the funds rate—as soon as the committee takes the first step in that direction."Morgan Stanley's Vincent Reinhart: "However, do not be too surprised to see some movement in the dots depicting the desired fed funds rate year-by-year. Relative to the majority call that the first rate move is in 2015, one participant or so might pull the date of first tightening forward in light of the vigor to spending in the face of fiscal headwinds. On the flip side, one or two might shift to 2016 given that inflation, which is very inertial, has moved so far below the Fed’s 2 percent goal. View the latter as a modest protest that market participants should not get too ahead of themselves in expecting tightening."Bank Of America Merrill Lynch's Michael Hanson: "We expect the FOMC statement and revised forecasts to at least partially acknowledge the recent slowing in the data, and for Bernanke’s press conference remarks to be on net dovish. Still, we expect the Fed to leave the door open to tapering before year end. And the markets could interpret a neutral-sounding directive as a tacit endorsement of the repricing of Fed policy. Our base case remains that persistently low inflation and slower growth in Q2 and Q3 will delay any cut in the Fed’s monthly QE3 purchase pace until 2014."UBS's Drew Matus: "Without a need to provide further details to market participants – the rise in yields has been manageable so far and the equity market is higher than it was at the time of the last FOMC meeting – we believe the Fed will choose to avoid “rocking the boat” rather than riling up complacent US markets. Although we believe the likely date for the initial taper remains Q1 2014, we do believe it is a close call for the Fed given the recent statements by Fed officials. The deciding factor for the timing of the initial taper will likely be the path of inflation. All else equal, continued disinflation would delay Fed actions to normalize policy."Deutsche Bank's Carl Riccadonna: "We do not expect Mr. Bernanke to yet show confidence that the time to taper QE is near, but the most important aspect of his media Q&A will be whether he signals that an H2 taper remains plausible. Of course, he could go one step further by signaling if it was likely given the Fed’s updated economic projections, but we expect he will refrain from being so explicit given lingering uncertainty over the near-term economic outlook."Societe Generale's Aneta Markowska: "The current state of affairs in the real economy suggests that the FOMC is unlikely to come to any new or different conclusions regarding the appropriate course for monetary policy. Economic data since the last FOMC meeting can only be described as lukewarm: not hot enough for the Fed to send a stronger tapering signal, and certainly not weak enough to even contemplate increasing the pace of asset purchases."High Frequency Economics' Jim O'Sullivan: "While Mr. Bernanke is unlikely to back away from anything he said on May 22, we expect he will emphasize that any change in policy will be dependent on the data; that they are not ready to move yet; that tapering is not tightening, just less easing; that the rate of purchases could also be increased; and that actual tightening is still a long way away. He will likely also highlight the tameness in infla- tion; he does not want 2013 to be a repeat of 1994."

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FEDEX: People Aren't In A Rush To Send Packages Overseas (FDX)

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CITI: Here's Why The Fed Wants To Slow Down QE, Even Before The Economy Hits Its Goals

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Markets Are Holding Steady Ahead Of The Fed

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