A Long and Painful Consumer Slowdown - Barron's Interview 12 comments
-
Font Size:
-
Print
- TweetThis
Barron's magazine interviews Stephanie Pomboy, Founder and President of MacroMavens, a firm that provides macroeconomic research and commentary to the institutional investment community. Pomboy was early (2002) to predict the collapse in consumer spending fueled by home price growth many thought would never stop. Now that her premonition has become a reality, she goes on the record saying the slowdown will be long and painful.
My fear is that it's actually just in the early stages and that it is going to get substantially worse on the economic side, although all the government measures that have taken place so far might help to insulate some of the damage on the financial side.
Short-term, she says commercial paper (both investment grade and junk) might rally and Treasurys sell off as investors 'go long socialism,' what with the government guaranteeing "all manner of private-credit claims." Longer-term, though, Pomboy says deleveraging is in its infancy, with Joe blue-collar leading the next wave: "U.S. consumers are actually going to do the unthinkable -- they are going to save -- and that we will be more like Japan than anyone believes is possible."
Foreign investors have already pared their buying of Treasurys, and are likely to grow more wary as long as the government acts as though it can print money without consequences. Raising interest rates significantly to bring investors back will not be an option due to the U.S.'s massive leverage - which means its only lure can be a weaker dollar. Ultimately, she thinks investors will rotate from paper to hard assets - she's bullish gold.
Pomboy sees GDP at 1% for at least the next five years, with sustained 10% unemployment a distinct possibility. On the equity front, she thinks emerging markets will outperform - and suggests looking at emerging Asian countries, including China.
::::::::::::::::::::::::::::
In its Follow Up column this week, Barron's takes the opposite side of the debate. In a story titled Don't Give Up on This Economy Barron's sees economic growth accelerating to 2.3% and 3% in Q3 and Q4 of 2009, and unemployment peaking at about 7.6%.
For a deeper understanding of stock market cycles, I suggest John Lounsbury's superb 10-part series (part I, further links here).
Related Articles
|
Find People on SA
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largest
increase in followers
in the last 7 days-
1
David Fry
-
2
Philip Davis
-
3
Bill Gross
-
4
Tyler Durden
-
5
TraderMark
Fastest Climbers » -
1
-
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most activeSee all
Instabloggers.
Top Instabloggers » -
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 12 comments:
All of our experts will state that this is happening or that is happening and they will produce all kinds of statistics to justify their so called facts.
But if an alternative view is proposed, they will ignore it.
Our economy is in a world of hurt because our political and corporate leaders are sending our jobs offshore and this is affecting the global economy because most of these nations either rely on the purchases that the American consumer makes or they too are sending their jobs offshore which is transferring the wealth from democratic nations to non democratic nations which is very bad, but that is another subject.
Why won't these experts humor me and use their media colleagues to actually get some hard data so that we can make the right decisions when steering this ship ?
And nope, I don't want some meaningless poll where you surveyed less then 1,000 people and we're supposed to take that as gospel.
I want a web site set up where every working age person in America is required to answer the following questions and to update them when changes are made and this is possible because the technology exists now.
I want these questions answered.
1. Has your job been offshored ?
A. If so, are you making more money ?
B. If so, are you making less money ?
C. If so, are you making the same money ?
2. Are you currently employed or self employed ?
A. If so, are you making more money then you did at your previous job ?
B. If so, are you making less money then you did at your previous job ?
C. If so, are you making the same money that you did at your previous job ?
3. Are you currently unemployed ?
A. If so, for less then 1 month ?
B. If so, for less then 3 months and more then 1 month ?
C. if so, for less then 6 months, but more then 3 months ?
D. If so, for less then 1 year, but more then 6 months ?
E. If so, for more then 1 year ?
These are not all of the questions that we need answered, but they will give us an accurate employment/unemploymen... numbers and they will give us an answer to the lie that the people whose jobs are offshored are finding similar or better paying jobs.
We NEED this information to plot our strategy and I'm amazed that none of our political leaders, especially the dept of labor are stepping up to the plate to get this information.
Virgil
www.KeepAmericaAtWork....
What Joe blue-collar does has limited economic impact, except for a few types of businesses simply because Joe blue-collar (plus the non-working poor) make only a small proportion of the countries income. And this proportion is declining as good manufacturing jobs disappear.
Sooner or later there will be far more consolidation in the retail space; Macy's will either have to raise additional capital or turn the business over to its bondholders.
Target will survive because of its reasonably clean balance sheet, but other Gen'l Mdse companies will also be forced out of business.
If 15 percent of the retail space in America suddenly reverted to pasture, consumers would still have adequate access to all the goods and services they could ever want
[>>Barron's sees economic growth accelerating to 2.3% and 3% in Q3 and Q4 of 2009, and unemployment peaking at about 7.6%.]
In fact this follow up is a 2-short-paragraph article with absolutely no meaningful content!
I too can predict 5 of the next 2 crisis.
Just wonder how much she charges for the "macroeconomic research and commentary (she provides) to the institutional investment community".
I don't mean to disparage anybody here and her guesses are probably as good as anybody's. What I appreciate in comments is the capacity to abstract from the immediacy to focus on the big picture.
You can't do that by projecting the last five months into the coming five years. Mr. Market is smarter than that.
Just my $0.02.
There is no such thing as investment any more. It's all just gambling. Some day we will invent and make new things, but that looks like a generation away.
On Dec 14 04:13 PM taojaxx wrote:
> I guess that person's track record is a good hint at the value of
> her current opinion: she's presented as bearish real estate in 2002,
> that is right ahead of one of the most bullish periods (2002/2006)
> in the history of the asset class.
> I too can predict 5 of the next 2 crisis.
> Just wonder how much she charges for the "macroeconomic research
> and commentary (she provides) to the institutional investment community".
>
> I don't mean to disparage anybody here and her guesses are probably
> as good as anybody's. What I appreciate in comments is the capacity
> to abstract from the immediacy to focus on the big picture.
> You can't do that by projecting the last five months into the coming
> five years. Mr. Market is smarter than that.
> Just my $0.02.
Besides, there are no powers that be conspiring against Joe Sixpack. I'm surprised I have to mention this but there's just an elected government that has a stake in ensuring the economy doesn't go down the drain. This being a great country, you have a chance every 4 years to kick it out of office and every two years to put checks and balances.
On Dec 14 04:30 PM Top Gun wrote:
> Guess you didn't get the memo - the real estate mega growth was caused
> by credit inflation and was not real growth. She was right, the powers
> that be manipulated us into growth. This time she realizes the Fed
> is doing the same thing now. What she is saying is what should happen,
> but as she says will be socialized away as best as our money printers
> can.
>
> There is no such thing as investment any more. It's all just gambling.
> Some day we will invent and make new things, but that looks like
> a generation away.
Really?????????? What country have you been living in for the last eight years?
Now, interest rates are lower. Securitization process is being fixed. FASB 157 is pro-cyclical. Be prepared for the surprise surge in buying by consumers.
Know what you mean about getting data. I wrote this article on the banking system. If I am correct much of what this lady says (besides buying physical gold) is suspect.
Regards,
Jake
Rioting at the Gates of Thermopylae: The Ramparts of the FED & Central Banks Shudder
M1 hits 37% growth!! "Most of the significant American banks, the larger banks, are bankrupt, totally bankrupt." - Jim Rogers, 12/11/2008
www.nolanchart.com/art...
On Dec 14 01:10 PM vbierschwale wrote:
> Here is something that really gets me wound up.
>
> All of our experts will state that this is happening or that is happening
> and they will produce all kinds of statistics to justify their so
> called facts.
>
> But if an alternative view is proposed, they will ignore it.
>
> Our economy is in a world of hurt because our political and corporate
> leaders are sending our jobs offshore and this is affecting the global
> economy because most of these nations either rely on the purchases
> that the American consumer makes or they too are sending their jobs
> offshore which is transferring the wealth from democratic nations
> to non democratic nations which is very bad, but that is another
> subject.
>
> Why won't these experts humor me and use their media colleagues to
> actually get some hard data so that we can make the right decisions
> when steering this ship ?
>
> And nope, I don't want some meaningless poll where you surveyed less
> then 1,000 people and we're supposed to take that as gospel.
>
> I want a web site set up where every working age person in America
> is required to answer the following questions and to update them
> when changes are made and this is possible because the technology
> exists now.
>
> I want these questions answered.
>
> 1. Has your job been offshored ?
> A. If so, are you making more money ?
> B. If so, are you making less money ?
> C. If so, are you making the same money ?
>
> 2. Are you currently employed or self employed ?
> A. If so, are you making more money then you did at your previous
> job ?
> B. If so, are you making less money then you did at your previous
> job ?
> C. If so, are you making the same money that you did at your previous
> job ?
>
> 3. Are you currently unemployed ?
> A. If so, for less then 1 month ?
> B. If so, for less then 3 months and more then 1 month ?
> C. if so, for less then 6 months, but more then 3 months ?
> D. If so, for less then 1 year, but more then 6 months ?
> E. If so, for more then 1 year ?
>
> These are not all of the questions that we need answered, but they
> will give us an accurate employment/unemploymen... numbers and they
> will give us an answer to the lie that the people whose jobs are
> offshored are finding similar or better paying jobs.
>
> We NEED this information to plot our strategy and I'm amazed that
> none of our political leaders, especially the dept of labor are stepping
> up to the plate to get this information.
>
> Virgil
> www.KeepAmericaAtWork....
signed...Six-packs brother.
www.associatedcontent....
www.associatedcontent....