This month's Investment Objective is a must read. For anyone Generation X or older. Right out of the gate, we get some psychedelic Beatles music and surreal artwork graphics. References are made to all sorts of popular entertainment culture which excite me, but probably wouldn't rope the "Gangnam Style" generation. I keep thinking about the cattle punching device in "No Country for Old Men".
Some soothing political observations are made. I love the reminder of "you didn't build that" on one side, and on the other, the plan-less campaign to magically make the numbers work.
Mr Gross resumes and renews the case for "New Normal", giving us bullet points about the usual suspects. Listed are Globalization, Demographics, Technology, and Debt. It would appear to me, that the first three of those are a bit outdated and obvious. Re-hashing the old Keynesian "robots replacing people" problem seems unproductive. We should be on top of that by now. People should be able to read and write, so they can get re-hired after being dismissed from their riveting jobs. But, it's not hard to accept the thesis of slow growth, new normal growth, general economic malaise. No need to quibble over the exact reasons when we all know the 800 pound gorilla is debt.
We are left with some investment ideas. I was surprised to see Oil and Gold in there. I personally have not inched forward with Gold at all this year. And I am getting clobbered by holding Exxon options. I was surprised to see high yield bonds dismissed, as Pimco sells tons of funds that focus on exactly that.
I really wish we could all agree; Housing is the issue, always has been the issue, and will remain the issue. The FED has done an excellent job of forcing money back out of savings accounts and into the equity markets. It is up to the rest of the Federal Government to route the rest of the money into housing. What happened to the first time home-buyer credits? Where they too expensive to implement? Until you get the middle class back out from underwater mortgages, all you will see for prosperity are Bill's "Strawberry Fields Forever". Lifting mortgages requires extreme pressure on the price of the existing stock of homes. I would even advocate a ban on new residential single family "McMansion" construction. Sure, office buildings may be needed in some markets. Apartments companies can roll the dice and test the market, and eat their own dog food. But every new single family home built, sinks another further underwater.