A pit stop at Roubini’s blog to have an idea of how the US dollar may fair in 2007…
According to Nouriel, the prospects continue to be on the negative side:
I am not in the business of predicting high frequency movements of
currency over the horizon of a week or a month. But my macro and
medium-term perspective tells me that fall of the dollar – over the
medium term – has still a very long way to go.
Bill Gross from PIMCO feels that cream may turn into skim milk… or that credit spreads are disquietingly approaching their lower profit limit.
Here’s a morsel to wet your appetite on his comments:
I, and I’m sure you as
well, am always amazed at the pundits who claim that certain just
released information is already priced in to the markets. How do they
know and who did they ask? Even if they did, would a 54% OJ majority
opinion be proof that it was so? I suspect not and that is why
investment management is partially art, partially science, and at least
a small part BS. But there are certain points in more definable, less BS-able asset markets that approach certainty if only because they
are more mathematically based.
Continuing… a short stop at Stephen Roach’s two articles.
The dark clouds in the horizon, according to Stephen:
I am not heralding the demise of globalization. What I suspect is that
a partial backtracking is probably now at hand, as a leftward tilt of
the body politic in the industrial world voices a strong protest over
the extraordinary disparity that has opened up between the returns to
capital and the rewards of labor. The extent of any backtracking is a
verdict that lies in the hands of the politicians — specifically, how
far they are willing to go in legislating an effort to narrow this
disparity.
My next stop is at Barry Ritholtz’s very thorough piece (e-mail required), filling in for John Mauldin, who’s taking some time off. Have a good time John —you too, Barry.
In his Real Estate and the Post-crash Economy, Barry underscores the importance of real estate (RE) in supporting the post 2000 crash years, and stresses the prolonged and damaging effects to the economy, as the aftermath of the recent downturn in the housing market.
His conclusion:
…we find it hard to imagine how the economy avoids a hard landing. In a
post-crash economy, that’s about the best we can hope for.
In an attempt to complete the weather map with the salient storms which will most likely assail investments next year, I did the rounds visiting some of the better respected and informed minds to hear what they had to say…
Of course, I’ll shine the cristal ball, and give it a try too.
Paul McCulley and Saumil Parikh make the case for the Fed’s transparency, arguing that both the US and the world economies have benefited as a consequence of this openness. Although I intuitively agree with them, I don’t think their low interest rate charts help to prove their point, viewed against the backdrop of the Chinese exported deflation of the last 20 years or so…
I think the article’s utter importance rests elsewhere: according to recent Fed estimates, based on population growth, participation and productivity growth, aging will trim 1 % from potential US GDP growth during the following 10 years… Since populations from Europe, Japan and China are also rapidly heading in the same direction, this contraction could easily be extrapolated to world growth forecasts.
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