Hello and welcome to Personally Invested. I'm your host, David Richardson. Today I have the chance to sit down and speak with RBC Global Asset Management's Chief Economist, Eric Lascelles. Eric is a ball of energy and someone who really brings economics to life for people who love economics, or people who maybe don't like economics as much. His approachable way of talking about current economic issues around the globe makes economics just that much more accessible to people. He's also very active on social media, and he's a really interesting personality with a really interesting life story. I think you'll enjoy the conversation.
Eric, welcome to Personally Invested. We've wanted to have you on for quite some time, but you're the busiest man in economics, so we haven't been able to. And I travel a lot too. We haven't been able to get you here, so it's great to have you here today.
Gosh, it's a pleasure to be here.
Excellent. So, we're hopefully going to be able to get together on a regular basis to get your insights on what's happening in the global economy. You're an extremely prolific writer and researcher, so we'll have some opportunities to dig into what you're working on at a particular moment in time. But for this one, we just want to tee that up with getting to know who you are and where you come from, and how someone as seemingly nice and personable as you can be so excited about a dismal science like economics. I get it, but not everyone would understand.
You're married, you have kids and everything, so you're not a complete social outcast, but you love economics.
I would appear to, yes. I confess that it's slightly mysterious to me as well. I might be a slightly manic person that makes me seem over-enthused. But, I have to say, when I look around at all of the wonderful jobs that exist out there, both inside our firm and outside, I'm not sure I'd want to trade with anyone, to be perfectly frank. Granted, there are certainly people who manage a lot more money than I do: I technically manage zero dollars, and that's not a big accomplishment. There are people with bigger titles, and more senior in various ways. I don't think that there's someone who has a more exciting and interesting mix of things to do, though. And so I like to think of myself as being a bit of a Renaissance man, perhaps, in the sense of getting to do a lot of writing, a lot of thinking, a lot of math and modeling and speaking to clients and presenting and being on TV and that sort of thing. I don't think there's a more varied job out there, which is fabulous. I also have to say that as much as I'm not likely to be the next CEO of the company, I do have a wonderful profile, both inside and outside of the firm, and so, to me, it's a pretty great place to be. And, most importantly, it is just intellectually fruitful. Whenever anything is happening in the world, I have to dig into it. That's my job, and it's an interesting place to be.
Well, I would love to be able to go to my mom and say: I'm the Chief Economist at RBC Global Asset Management, the largest asset manager in Canada. I think that's a pretty good title, but then, that's me. I bought my first stock when I was 10. I've loved economics my whole life. It was my favorite course in high school, and in university too. That's my background.
When did it start for you?
That's a good question. I would say it's a little blurry as origin stories usually go. To begin with, I have a father who does have a degree in economics, so there was a little bit of that: the Economist magazine would sneak its way into the house on occasion, and so I had a little bit of exposure. I'll confess though, I think my point of contact was probably similar to yours in the sense of being fascinated by markets and, at a similar age, I put a little money in and very quickly losing it all in Japanese Mutual Funds in the early 90s, as I seem to remember. Don't repeat that mistake I guess. But, in the end, it's really a story in which I liked markets, and I was interested in that, and that naturally took me in something of an economic direction. I went to school in the United States. They didn't have a business program where I went, and so economics was the thing you studied if you had an interest in being on Bay Street or on Wall Street or working in any other similar capacity. So it wasn't a clear statement by me that that was my plan, but it was an opportunity to do a bit of learning in the subject. I came out of university and the first .com boom was going on and I had a minor in computer science, as it happens, and so I did the .com thing for a while.
Further to that idea, it was not preordained that I would be an economist. That .com thing, however, blew up about six months later, and so I came back to Canada with my tail between my legs and I managed to latch on at Statistics Canada. And so, there was me as an economist for the first time, and I found the work quite interesting. It struck me that this is something I could see myself doing. I then went and got a graduate degree in economics at Queen's University. And then I was very lucky to land at a big bank-not this particular one, but another big bank here in Toronto. I guess the rest is history, although I must confess, I think, as with almost all of us, our career is one in which we grab the low hanging fruit as it presents itself to us. So, conceivably, I could have found myself in a different role, but as it happened the opportunities were largely in an economic direction, and I have no regrets. I think it's been a pretty good fit in the end in the sense that I like markets and I like to think hard about math and modeling, but I also love writing and I like speaking as well. I think this is a job that marries all those things.
Sure. Was economics any better for you in high school at helping you to get dates than it was for me? Because it was kind of toxic for me.
No, not at all. I did take some economics classes in high school as well. I am married to someone I went to high school with, so perhaps it didn't completely hurt me, but nevertheless, it was not a helping thing.
Yeah, I had to go several years and get a job before I could get a date, but that's not a story for this podcast. Where did you grow up?
I'm from Ottawa. I'm the son of a civil servant and so I was exposed to that side of things, and I was briefly one myself, I suppose you might say, in the sense of having worked at Stats Canada for a little while as well. Ottawa was a lovely place to grow up. It really is a great family town with lots of outdoor-type stuff to do. I was a pretty good student, as you would imagine, but I was really into running. Track & Field was my passion. I was on the Ottawa Lions Track Club and running seriously for them and having some pretty good success, and eventually sneaking my way onto the Canadian National Junior Track Team at the end of high school. I got to represent Canada in a few meets, which was very exciting, and then I went on to Princeton University and the NCAA system, and I ran for them as well while studying.
Oh really? So you went to Princeton? Was that on a scholarship for athletics or academics, or was it a bit of both?
It depends on how I want to flatter myself. I mean, the reality is that if anyone goes to an Ivy League school, it's all needs-based. And so, if you come from a very wealthy family, you don't get a penny, it doesn't matter if you're the world's best athlete. If you are very poor, on the contrary, you can get a full scholarship. In fact, you will get a full scholarship, more or less, regardless of your sporting or academic prowess, so long as you got in. And so, Being from somewhere between those two points, I did get extensive financial assistance. I can't claim it was purely on my running merit, though.
What was the experience like at an Ivy League school?
It was quite good, I'm glad I did it-it looks good on a resume, I made some great friends as well and learned some things too. And so it was lovely really in every way. Ben Bernanke was just coming on to the faculty as I was leaving. Of course, no one had the foggiest clue who he would later become. I don't know that I quite fully capitalized on that, but it was great. It's a good school with wonderful resources. It has good athletic programs as well, which was also a priority for me. I think that, for everyone, university is an adjustment, but I found it to be probably a bigger one than many in the sense that I was switching countries. That might sound like a small thing, but I found there to be some pretty big differences when you're suddenly operating in a different echelon as well, with many people coming from private-school backgrounds and so on. So, there was a bit of a scramble involved there, I would say, but it worked out pretty well in the end, and I've got some fond memories.
And I'm sure it laid the groundwork for what I think everyone who works with you finds so remarkable about you, which is just this incredible work ethic. .
Well, you said it, not me. I don't know if that's quite true, but I'll
take that reputation whether it's true or not. We do work hard, though.
We're a small team: 2 ½ people when I'm feeling generous and
that's tiny compared to a lot of economic shops out there. I can imagine
the wonderful things we might be capable of doing if we were two or
three times bigger than that. All the same, though, I have to say two
things. One is: we've also got people managing funds of billions of
dollars with teams of two or three, and so I struggle to justify why my
group should be bigger than theirs. We run pretty lean, and we do a
reasonably good job of it, I think.
And then, equally, one of the great beauties of being part of the largest asset manager in Canada is that my job is not just to find interesting and important new things: it's to filter information. I get hundreds of emails a day of research coming from sell-side institutions. We pay millions of dollars a year for independent research and all of it washes over us, and a big part of it is identifying what's a good idea, what's interesting. So it's almost like we have a team of thousands working for us, as opposed to just a couple of people. Our job is to figure out what's important in all of that. It's very similar when we do forecasting. Certainly, trying to get those GDP forecasts right and all of the other things. Some of the work is the traditional "let's crunch some numbers and let's run a model" and that kind of thing. But there are lots of other tricks you can use in terms of knowing what's the consensus, what's the momentum in the shifting consensus forecast. We ask: "who are the smart forecasters out there?" And then say let's sit on their shoulders if we can. There's a lot of great resources we have-it's not just us plugging numbers into a single PC here. It's almost a bit of crowdsourcing.
I learned about your work ethic the hard way. You had just started with RBC. Of course, we've got millions of customers across Canada. We were in the midst of a little bit of market volatility, and we were looking for some comments from you, and I remember at the time thinking: "This new economist, why don't we have anything from him? We should. When are we going to get something?" and then, about two seconds later, the email pops in: you've written a big piece even though you were at a very important function on the other side of the globe, which you left early so that you could write this brilliant piece. And boom, we had it. I said to myself: "Okay. I'm never going to say anything about his work ethic again." And you're so prolific, which is so amazing. Where do you get your ideas for some of the thought-pieces that you write?
It's a good question. I must confess, some of my being prolific probably goes back to learning to type at a very young age. I could type 100 words a minute. That goes a long way towards being prolific. My sympathies to those who are pecking around on the keyboard-it's hard to be quite as prolific that way.
But you're an athlete.
A typing athlete, yeah. So, where do my ideas come from? Really, they come from a huge range of places. Some of it is just: "Hey, I just read 300 pieces of research today, there's probably a good idea or two in there somewhere, and so that's often where it starts, it's not always just a Eureka moment in bed. I will say, all the same, having done this for the better part of two decades in various capacities, I've got a sense for what matters and where I should be looking. So, when I see the stock market down, I go look around and fairly quickly realize there are some macro elements to that story, and this is an opportunity to dig into those ideas a little more thoroughly. It's never exactly: do you have a good or a bad forecast? It's always versus the consensus, right?
Because the market prices something in. So the question is, when things
happen in markets, is whether it's justified or not. And so we're
looking and often agreeing with the direction of the market, but
questioning whether the size makes sense. And so that's leaning back on:
"Okay, yeah, the growth forecast has deteriorated to some extent. Has it
deteriorated as much as the market thinks?" And so that's the sort of
question we try and answer. Okay, rising interest rates are perhaps an
issue, are they likely to go a lot further? How much damage gets done by
these rates? What other context is there? And so some of it's fairly
obvious in terms of what you need to delve into.
And then there are just idiosyncratic issues that come along. So I keep a log: Here are 20 things I'd like to look into at some point in time. If I've got a down moment, then there's an issue I'm going to dig into. There may be no rhyme or reason at all to the precise timing for why some of those thoughts come out when they do. We recently updated, for example, some of our work on the economic impact of climate change. That's a constant; you could write about that any day of the week. Or, I suppose, you may not write about it at all for a few years, since it doesn't change very quickly. But it might well be an important subject, and so, when I found new research on that one, it was: "Oh, the Nobel Prize in economics just went to William Nordhaus. He won that in large part for his work on environmental economics. I should probably be reading a few of his papers." And what do you know? Some interesting findings emerged from that.
I find a lot of what you write is very timely and important, meaty stuff. Hopefully we will have a chance over the next several months to dig deeper into some of those papers. You're also very active on social media.
That's right. I guess I'm one of the guinea pigs, you might say, at least within the Royal Bank family on that front. We turn the weekly research that I generate and the monthly webcast and some of the other documents into Twitter Tweets and into various posts on LinkedIn as well. And there's been fabulous uptake of that. Of course listeners are welcome to follow along if they're so inclined. And it's been great for reaching beyond, in some cases, our immediate clientele and out into the world of prospects. But I think equally-and maybe even more so-it's been great to reach people who are clients and who are, in fact, in many cases, colleagues, but just find us to be a convenient means of obtaining information, and so that's been just fabulous.
We'll include your social media contact data in the closing comments and on the webpage associated with this, so that anyone who wants to follow Eric will be able to do so. And he's a great follow: always timely information and this research, for those of you who like really meaty topics are, for lack of a better word, 'topical' because they're current things that people are thinking about, it's an amazing read. So, let me just finish it off with: how do you balance all of this? You've got a family and your wife is busy as well. How do you pull it all together?
Yeah, it's busy, I think that's probably a fair claim for many people
out there as well. Part of it is, I've got a fabulous team. I've got a
fabulous nuclear team. Vivien Lee is an economist with me, a few other
people and so they're doing a lot of work. Most of the work frankly in
the background, I get a lot of credit, but they do a lot of work, and so
let's fully acknowledge them. And then the other beautiful thing about
the way this firm has been put together is, I have a huge number of
tools at my fingertips and so, some of those tools are our Human
Resources in the sense that I've got a group that's helping me on the
social media feeds and there is an editor who can make sure my work
reads well as needed and we've got a graphics designer who can make
charts and diagrams look pretty and there are assistants booking travel
and all of these things. Now, I may have a team of 2 ½, but
arguably I'm using 10 people's worth of resources in terms of what we're
able to put together. So, a lot of it is precisely that and that's a big
part. I would say equally this firm invests in technology, and so I've
spent I think $50,000 a year on one big chronometric model, that it
would take me 100 years to build by myself, and yet, here we have it at
our fingertips and we can do stress testing and run forecasts on. It's
only one of about a dozen inputs we use when we actually do our
forecasting, but the bottom line is: I'm not going back to square one on
every single thing I'm doing, I'm already on third base here, you might
say. And so that makes things a lot easier.
And then more broadly from a family sense I think, as with everyone, it's a struggle. And you travel, I think, more than me, so you would appreciate this even more than I do, but, there is a lot of hard work done in the background by family to make all of this possible and I'm deeply appreciative of that. When I'm around, I try and do as much as I can. I'm on bedtime duty when I'm in town, cause I'm certainly not when I'm out of town and, I'm a Scouts Leader and a Beavers Leader and a baseball sprint coach and a few other things and obviously sometimes I'm just not there for that particular session but, I think when you're around, you've got to do it. And of course, weekends are key in all of that.
Yeah, nothing more important than family, in terms of being able to help
everything pull together.
Well, Eric, thanks for your time today. One of the great things we've been able to do thus far with this podcast is highlight some of the great talent at RBC Global Asset Management, but not just that they're extremely intelligent and talented people with great educational backgrounds, but really great people too. Everyone who you work with, down to the last person, just loves that enthusiasm and just genuine, genuine nice person that you are and it's just a pleasure to have you here today.
Gosh, that's really kind of you to say and it was a real pleasure.
Thank you again for joining us on Personally Invested. I hope you enjoyed our conversation with Eric Lascelles. If you want to see more from Eric, find him on LinkedIn or follow him on Twitter at @rbcgamchiefecon. Thank you.