gabe borenstein

Expect a Half-Decade of Weak Growth - Barron's Interview

You can not discuss U.S and the European economies in the same breath .To put it simply U.S and European economies are about to diverge cyclically .The U.S economy is in the process of consolidation while still addressing and "digesting" some problems.Europe is about to face them .
After the current "turmoil",the U.S economy very well may become the most competitive meam ,lean economic machine in the world.The lessons and adjustments will provide the new dynamics to the U.S economy.
Once the "financial " paranoia is understood within the context of record short open interest,the logic will prevail,the financial sector will lead a major stock market rally ,lead by the shares of the agencies such as FNMA and FRE(established by the act of Congress and guaranteed implicitly by the U.S government).Broad based rally will follow shortly after that .Based on the past history and the current market reality ,3% GDP growth would be quite acceptable. By the first qtr of 2009 ,the U.S economy should be expanding at 5% or faster (GDP).
Europe will be the cyclical laggard and it may be heading for a statistical recession .
This economic outcome of the economic implosion in Europe will accelerate the global "flight" to the dollar assets fuelling unprecedented stock market rally and creating demand in the housing sector(the most undervalued dollar asset).
Where was the investment universe two years ago or even a year
ago,when I have issued serious economic warnings?(as late as September of 2007)......The universe was long the stocks -that was the difference.
With all of the fiscal and the monetary measures in in place ,dynamic recovery is a reality in the period ahead .
In the meantime the market volatility will continue.