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Did someone say early majority? I think so.
He start off with a section about fear driving up every asset class:
Than a little anti-spin of his own:
(bolding mine)
After reading this guy for a few months, I still had no idea that Rosenberg himself was a gold bug! Up until a couple of weeks ago he wasn't publicly considering the possibility of dollar devaluation. Now he's all over it.
source: https://ems.gluskinsheff.net/
He start off with a section about fear driving up every asset class:
The gold bugs fear that the fiscal and monetary largesse globally will lead to inflation and fear that the U.S. dollar is on the verge of collapse.
STATE CAPITALISM
It is next to impossible to really gauge the health of the U.S. and the global economy in view of the massive doses of medication that have been administered by governments everywhere. In the U.S., the situation has been particularly acute because it is so apparent that domestic demand falls off a cliff once the freebies from the unknown taxpayer expire. We saw this with the end to cash-for-clunkers, and wouldn't you know it, but the 2.7% slide in the S&P homebuilders index yesterday was pinned on a Deutsche Bank report concluding that the U.S. government is not going to extend the first-time homebuyer tax credit, which is due to expire at the end of November.
As we sifted through this story on Bloomberg News we found some quotes from market pundits that truly expose today's mentality — the desire for ongoing government intervention.
“I can't believe the Congress will be so stupid in allowing those programs to expire. If the government suddenly eliminates the stimulus program in the housing market that will begin to call into risk the sustainability of the recovery at some point during 2010. I think that program will be not only extended, but expanded.”
That is a remarkable statement — the risk is that the government “suddenly eliminates” the stimulus. Never before has $8,000 separated a boom from a bust. Never mind that housing receives more preferential treatment than anything else in the economy even though it is not exactly a productive asset — capital gains exemption, mortgage interest deductibility, and what about FHA financing?
We then came across this stroke of brilliance:
“The experience of the last few years argues that government acts on housing only when the situation is plainly deteriorating … if, as we expect, housing conditions deteriorate again, that might propel a renewal of the purchase tax credit.”
Our head is spinning over that one. Is the conclusion that when housing conditions improve, investors should be shorting the homebuilders because the government is going to withdraw its support? And, are we supposed to go long the group when the fundamentals deteriorate because Uncle Sam will come to the rescue?
We are confused. If state capitalism works, shouldn’t we be investing heavily in Venezuela?
Speaking of South America, we should add that Brazil is a country that has weaned off the state and leaned on the private sector! If you are looking for a vibrant consumer, look there — auto sales in September were up 15% from a year ago. Industrial production rose 1.2% in August too — the eighth increase in as many months. And, global inflows are running at such a decent pace that the central bank has been forced to intervene heavily in the FX market to resist appreciation in the Real. (How many of us ever thought we'd see Brazil’s central bank intervening in a way that would build its FX reserves?) Even with that intervention, the Real has appreciated for four days in a row, and has surged 32% against the U.S. dollar so far this year (the most of all the emerging market currencies); and the Bovespa has surged 180% in less than a year (and still ‘only’ trades in line with the emerging market space at 2x book).
When U.S. President Obama says, as he did yesterday, that he is willing to “explore any and all additional measures” to squeeze every last possible basis point out of GDP growth as we head into a mid-term election year, rest assured that U.S. dollar depreciation is going to play a very critical mercantilist role (and see page A4 of the WSJ — Democrats Press For Jobs Program). After all, it is just a different form of ‘beggar thy neighbour’ trade protectionism, and no sooner did the U.S. slap 35% tariffs on Chinese-made tires than the Commerce Department is mulling over “anti-dumping” duties on imports of Chinese steel (see page A6 of the WSJ). This is, after all, a President that is still suffering from a 50% disapproval rating, and as such is really capable of anything (like an FHA bailout — its willingness to insure bad credits to keep the housing market alive has triggered $54 billion of losses and a likely “bailout”, according to Bloomberg News).
Buy gold.
It is next to impossible to really gauge the health of the U.S. and the global economy in view of the massive doses of medication that have been administered by governments everywhere. In the U.S., the situation has been particularly acute because it is so apparent that domestic demand falls off a cliff once the freebies from the unknown taxpayer expire. We saw this with the end to cash-for-clunkers, and wouldn't you know it, but the 2.7% slide in the S&P homebuilders index yesterday was pinned on a Deutsche Bank report concluding that the U.S. government is not going to extend the first-time homebuyer tax credit, which is due to expire at the end of November.
As we sifted through this story on Bloomberg News we found some quotes from market pundits that truly expose today's mentality — the desire for ongoing government intervention.
“I can't believe the Congress will be so stupid in allowing those programs to expire. If the government suddenly eliminates the stimulus program in the housing market that will begin to call into risk the sustainability of the recovery at some point during 2010. I think that program will be not only extended, but expanded.”
That is a remarkable statement — the risk is that the government “suddenly eliminates” the stimulus. Never before has $8,000 separated a boom from a bust. Never mind that housing receives more preferential treatment than anything else in the economy even though it is not exactly a productive asset — capital gains exemption, mortgage interest deductibility, and what about FHA financing?
We then came across this stroke of brilliance:
“The experience of the last few years argues that government acts on housing only when the situation is plainly deteriorating … if, as we expect, housing conditions deteriorate again, that might propel a renewal of the purchase tax credit.”
Our head is spinning over that one. Is the conclusion that when housing conditions improve, investors should be shorting the homebuilders because the government is going to withdraw its support? And, are we supposed to go long the group when the fundamentals deteriorate because Uncle Sam will come to the rescue?
We are confused. If state capitalism works, shouldn’t we be investing heavily in Venezuela?
Speaking of South America, we should add that Brazil is a country that has weaned off the state and leaned on the private sector! If you are looking for a vibrant consumer, look there — auto sales in September were up 15% from a year ago. Industrial production rose 1.2% in August too — the eighth increase in as many months. And, global inflows are running at such a decent pace that the central bank has been forced to intervene heavily in the FX market to resist appreciation in the Real. (How many of us ever thought we'd see Brazil’s central bank intervening in a way that would build its FX reserves?) Even with that intervention, the Real has appreciated for four days in a row, and has surged 32% against the U.S. dollar so far this year (the most of all the emerging market currencies); and the Bovespa has surged 180% in less than a year (and still ‘only’ trades in line with the emerging market space at 2x book).
When U.S. President Obama says, as he did yesterday, that he is willing to “explore any and all additional measures” to squeeze every last possible basis point out of GDP growth as we head into a mid-term election year, rest assured that U.S. dollar depreciation is going to play a very critical mercantilist role (and see page A4 of the WSJ — Democrats Press For Jobs Program). After all, it is just a different form of ‘beggar thy neighbour’ trade protectionism, and no sooner did the U.S. slap 35% tariffs on Chinese-made tires than the Commerce Department is mulling over “anti-dumping” duties on imports of Chinese steel (see page A6 of the WSJ). This is, after all, a President that is still suffering from a 50% disapproval rating, and as such is really capable of anything (like an FHA bailout — its willingness to insure bad credits to keep the housing market alive has triggered $54 billion of losses and a likely “bailout”, according to Bloomberg News).
Buy gold.
After reading this guy for a few months, I still had no idea that Rosenberg himself was a gold bug! Up until a couple of weeks ago he wasn't publicly considering the possibility of dollar devaluation. Now he's all over it.
source: https://ems.gluskinsheff.net/
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