I expected no internet service where I am currently, Savary Island BC, (pictured left) but yippee I have it! As I digest some of the economic news that I am reading I thought I would link to some of the pieces that I am finding particularly insightful. If you have been reading my blog you will know that I remain very skeptical about the 'recovery'. From a personal investment perspective I have been a bear for some time and I remain that way. For me that has met a low allocation ( though not zero or short) to equities in general which saved me a lot on the way down but has had an opportunity cost on the way up. With equities generally speaking up 50% from the March 9 lows one has to ask, what now? I remain cautious, very cautious, and am tempted to sell out/hedge the exposure we do have to protext from a correction. Why you may ask? Check out some of these links for greater detail.
The Skeptical Market Observer - Good News, Bad News About the Economy.
Hoisington Asset Management - Quarterly Forecast ( thanks to Naked Capitalism for links)
"The combination of an extremely overleveraged economy, ineffectual monetary policy and misdirected fiscal policy initiatives suggests that the U.S. economy faces a long difficult struggle. While depleted inventories and the buildup of pent-up demand may produce intermittent spurts of growth, these brief episodes are not likely to be sustained. In several years, real GDP may be no higher than its current levels. However, since the population will continue to grow, per capita GDP will decline; thus, the standard of living will diminish as unemployment rises. These conditions will produce a deflationary environment similar to the Japanese condition."
Pimco - From Mohamed El-Erian - The Crisis is Morphing Again
"The bottom line is a simple yet powerful one. The global crisis is morphing again. Having already contaminated (in a sequential and cumulative manner) housing, finance and the consumer, it is now threatening the potency and credibility of the economic policymaking apparatus. As far as I can see, there are no first best policy responses that are readily available and easy to implement. Instead, the economy will continue to struggle, navigating both the adverse implications of last year’s financial crisis and the unintended consequences of the experimental policy responses. Given the inevitable socio-political dimensions, this story will play out well beyond the realm of the economy, policymaking and markets."
Pimco - Bill Gross's August Commentary
More to come..........................