Far from showing signs of recovery the USA economy is showing strong signs of tanking, not helped by being under the unstable influence of its current and isolationist leader. The long term effect for us in NZ, is low interest rates (below 6%) for some years to come as the world economy continues to struggle.
Here is a brief summary of the opinions of a number of the USA’s strategic thinkers and investment analysts who recently spoke at the SIC 2017 (Strategic Investment Conference) in May. This conference is attended by those who make the decisions of where to invest their own and others money. These snippets are taken directly from an email sent to subscribers of “Maudlin Economics” by Ed D’Agostino .
The common theme from these men, who are paid to get ahead of the market, is refocus your investments in the USA and get it into the emerging countries such as China and India. With this type of thinking coming from the people who advise the advisers the USA is due for some capital drain which will not help their already blundering economy.
Louis Gave, CIO of Gavekal: Diverging monetary policies and valuations would suggest emerging market equites will outperform their US counterparts over the coming decade… Being underweight US stocks is the slam-dunk trade, while consumer-related stocks in emerging markets are attractive. With certain European sectors near their 2012–2013 crisis lows, they look interesting.
Raoul Pal & Grant Williams, founders of Real Vision TV: Investors should be deploying capital based on the powerful demographic shifts now happening across the world… With the coming wave of retiring Baby Boomers, US equites will suffer. Look to capitalize on the huge developments taking place in India and Asian emerging markets.
Lacy Hunt, EVP of Hoisington Investment Management: Every US recession since 1915 (bar the one which followed WWII) has been preceded by the Fed tightening monetary policy. This time will be no different… Today, the bond market is telling investors these rate hikes will have adverse economic consequences. We have likely not seen the low in bond yields.
Marc Faber, publisher of Gloom, Boom & Doom Report: With favourable economic conditions and massive projects like China’s One Belt One Road happening, the setup for Asian emerging markets is extremely bullish. The opposite is true for the US and Europe… Investors should be selling US stocks and focusing on quality consumer and utility companies in emerging markets.
Mark Yusko, CEO & CIO of Morgan Creek Capital Management: The US is in the late stages of the business cycle, and when the downturn comes, stocks will drop by at least 30%. The outlook for US equites is bearish, but consumer and infrastructure stocks in emerging markets look attractive. There are amazing opportunities to buy quality companies trading at big discounts in China and India today.
Peter Boockvar, chief market analyst for the Lindsey Group: Just like quantitative easing caused asset prices to rise, if the Fed reduces the size of its balance sheet, asset prices will plunge… Given today’s lofty valuations, it’s a major sell signal for stocks if economic data continues to disappoint. Investors should be deploying capital in beaten-up sectors like agriculture and precious metals.
David Rosenberg, chief economist for Gluskin Sheff: Due to several deflationary headwinds facing the US economy, expect growth to remain lower for longer… The bull-market in bonds, which started in 1981 is not over. Investors should be stepping up the quality of their portfolios and investing around “late-cycle” themes.
John Mauldin, chairman of Mauldin Economics: Very soon we will have to deal with, one way or another, the largest twin bubbles in the history of the world: global debt and the even larger bubble of government promises. There will likely be some type of debt jubilee, accompanied by huge currency devaluation. As the disruption unfolds, it will be necessary to not only diversify among asset classes, but also trading strategies.