I would encourage you to read a piece by Meredith Whitney (pictured hear) that appeared in the journal on Friday. She opens this way – “Anyone counting on a meaningful economic recovery will be greatly disappointed. How do I know? I follow credit.” ( read the full piece here) Her argument is that small businesses cannot get financing, and this is a huge problem. “In the US small businesses employ 50% of the country’s workforce and contribute 38% to GDP. Without access to credit, small businesses can’t grow, can’t hire, and too often end up going out of business…”
You know my friend was beating me up the other day saying that I am a perma bear and have missed the boat. My response was this, I have been and do remain very bearish on the ECONOMY but my view on the markets ( equity, credit and currency) has actually been highly variable. There is a difference. Just because you are negative on the economy does not mean you cannot be positive on the markets as it depends on what news you feel is build in to the market. Right now, I am negative on US equities, credit spreads generally, and the US dollar, but I have not been that way all year. March was clearly a buying opportunity as so much negative news was priced in, but that, I believe, is not the case now. Also just because markets get ‘cheap’ does not necessarily mean one should ‘buy’ as it truly depends how much of your assets are already invested. What I have learned about myself is that I invest with a macro view, and when that macro view is negative, I have a hard time buying risky assets even if they look “cheap.” Too many years of trading bonds I guess…..
Next week I will be attending the World Business Forum in NY featuring the likes of Bill Clinton, Jeff Sachs, Warren Buffet, and more. I am also attending a dinner with Nouriel Roubini, also known as Dr. Doom, so I will be reporting back on that as well. Stay tuned and have a nice weekend.