Anyone subscribe to "retiredinvestor.com"? Interesting site...with much more analysis and substance than the bubbly yee-ha folks at MSNBC and Bloomberg who say the markets are forever headed to the moon.
From the April edition - economic outlook:
"Our first feature article is our quarterly Economic Update. Our base case scenario for the world economy has not changed. The United States currently accounts for 19.7% of global economic output. Private consumption expenditure represents 70% of that amount. A further 6.2% of GDP is devoted to gross fixed capital investment in housing. That means that the U.S. consumer currently accounts for about 15% of global economic output. Unfortunately, much of this consumption binge has been financed with loans that were based on rising housing values. With housing prices falling at a quickening pace, this game is coming to an end.
The main counterpart to U.S. consumption and housing investment has been an unprecedented investment boom in China, where investment spending amounting to 45% of total demand. A substantial portion of this investment has been made in export industries whose sales are made to U.S. consumers. With China accounting for 15.1% of global GDP, Chinese investment amounts to a further 6.8% of global GDP. As U.S. housing prices head south, this second motor of global economic growth is also at risk, as China cannot increase its private consumption quick enough to offset the coming downturn in the United States. We're not sure how this process will evolve (e.g., will it be deflationary or inflationary? Will it be characterized by international cooperation to limit its harmful effects, or by intensifying political conflicts that will make things worse? We're not sure about the answers to these questions. But we do believe that the next few years will be very challenging ones. If we had to pick asset classes that seem undervalued in the face of this outlook, we would point to timber, real return bonds, equity volatility and non-U.S. dollar government bonds."
From the Chinese Premier, at the recent National People's Congress - "not the time for complacency, with respect to the economy", which he characterized as "unstable, unbalanced, uncoordinated and unsustainable".
$2/pound. $1.36/euro. $1 trillion/year sent overseas. Equity markets - virtually all - at all time record highs. The enormous foreign exchange reserves have supported the US with the largest-ever buyer financing program.
As in the 2000 "correction", where the NASDAQ recovered briefly before the big fall, was the 9% drop in China in one day - and the resulting drop here at home - just the first crack before the real damage gets done?
Highly recommended reading (and a heck of a bargain!) - with not just a US perspective, but worldwide...
From the April edition - economic outlook:
"Our first feature article is our quarterly Economic Update. Our base case scenario for the world economy has not changed. The United States currently accounts for 19.7% of global economic output. Private consumption expenditure represents 70% of that amount. A further 6.2% of GDP is devoted to gross fixed capital investment in housing. That means that the U.S. consumer currently accounts for about 15% of global economic output. Unfortunately, much of this consumption binge has been financed with loans that were based on rising housing values. With housing prices falling at a quickening pace, this game is coming to an end.
The main counterpart to U.S. consumption and housing investment has been an unprecedented investment boom in China, where investment spending amounting to 45% of total demand. A substantial portion of this investment has been made in export industries whose sales are made to U.S. consumers. With China accounting for 15.1% of global GDP, Chinese investment amounts to a further 6.8% of global GDP. As U.S. housing prices head south, this second motor of global economic growth is also at risk, as China cannot increase its private consumption quick enough to offset the coming downturn in the United States. We're not sure how this process will evolve (e.g., will it be deflationary or inflationary? Will it be characterized by international cooperation to limit its harmful effects, or by intensifying political conflicts that will make things worse? We're not sure about the answers to these questions. But we do believe that the next few years will be very challenging ones. If we had to pick asset classes that seem undervalued in the face of this outlook, we would point to timber, real return bonds, equity volatility and non-U.S. dollar government bonds."
From the Chinese Premier, at the recent National People's Congress - "not the time for complacency, with respect to the economy", which he characterized as "unstable, unbalanced, uncoordinated and unsustainable".
$2/pound. $1.36/euro. $1 trillion/year sent overseas. Equity markets - virtually all - at all time record highs. The enormous foreign exchange reserves have supported the US with the largest-ever buyer financing program.
As in the 2000 "correction", where the NASDAQ recovered briefly before the big fall, was the 9% drop in China in one day - and the resulting drop here at home - just the first crack before the real damage gets done?
Highly recommended reading (and a heck of a bargain!) - with not just a US perspective, but worldwide...
