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Auspicious Start to 2014

beebee
edited January 2014 in Off-Topic
Six areas to watch:
1. Fed tapering, interest rates, and credit markets.
2. Housing.
3. Energy.
4. Capital spending.
5. Profit margins.
6. Debt demand and credit growth.

Worth a read:
auspicious-start-2014

Comments

  • edited January 2014
    Good article from the optimist crowd.

    They forgot one critical area to watch: consumer demand. While all economic indicators are on a positive trajectory relative to the recession, they don't seem to be in a sustainable trajectory yet. For example, the GDP growth is not enough to solve unemployment problem. The lack of consumer demand is a systemic problem that needs to be solved. That is the basis of US economy. Lack of wage growth was masked by a housing bubble for a long time. Housing re-inflation will help to a certain extent but that will not be sufficient without getting into another bubble. Wage stagnation is a more serious problem to be solved. There are already signs that this holiday season was a disaster for many retailers. Current treatment of capital over labor has swung too far in favor of capital and that is not sustainable for a healthy economy. So, I expect some significant turmoil ahead without anticipating doomsday.

    Market gains on the other hand will continue as long as Fed more or less continues the status quo with minimal tapering. That will continue to benefit people with capital more than people with labor to invest. This is a problem in the long term however for a sustainable recovery.
  • beebee
    edited January 2014
    Reply to @cman: Your comment about consumer demand has a lot of tenticles.

    Auto maker can't seem to give cars away here in the US based on today's incredibly low interest rates, but China has bought more new cars than the US (for the first time). I hope China continue to promote consumerism.

    Japan may create some global consumer demand as they continue their QExperiment by making Japanese products cheaper for the world's consumers to buy.

    An aging world is not a friendly environment for consumer demand unless we're talking about health care spending.

    Even Technology efficiencies have reduced consumer demand for things like electricity and fuel. This should be a positive deflationary force that could potentially offset other inflationary forces...but not so quick.

    Enter the tax man. Instead of seeing a drop in your monthly utility bills notice instead the additional charges (in the form of fees and taxes). In Florida FL&P ( Florida Light and Power) is charging customers $100 for the installation of "smart meters" as well as a monthly "rental fee" of $10 for the meter. In CT, the state legistature has decided to balance the state budget shortfall by hiding a additional fee in CL&P (Ct Light & Power) customer's electric bills solely for the purpose of making state budget ends meet.

    Just some thoughts.

  • edited January 2014
    Let's not forget about the sentiment issue here. Some of the sentiment polls such as the Hulbert Sentiment Index was recently at historic highs of optimism. Likewise with the Market Vane poll. My favorite, Investors Intelligence, is at highs not seen in many a moon.
    Unless it is different this time (and who knows it could well be) a correction of some magnitude is just around the corner. Sentiment was my savior and guiding light in the 80s and 90s but back then fewer used it as a trading tool. So maybe it has lost its effectiveness. We shall soon see.
  • Don't forget the marijuana stocks, although some of these may be scams-

    http://www.sacbee.com/2014/01/10/6063230/investors-get-warnings-about-marijuana.html

    The biotech fund FBIOX was up over 12% last week- mainly due to ICPT
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