Hello;
Depends how we get to a growth level of 1%. If we can keep the employment picture in decent shape, with unemployment at no higher then about 6.0% - 6.2%, then his economic picture is probably correct.
In that case, the winners will be bonds, which will be about 5.75% - 6% (at such low growth), utilities, banks (especially regionals), as well as consumer durables (autos, large appliances, etc.) People will have more money, and not be so worried about their employment futures.
If unemployment spikes, then all bets are off. Only the consumer non-durables, such as food, as well as utilities, will be very strong.
In either case, the long bond will carry the market a bit, unless the earnings picture is flat to negative. Otherwise, a 6% long bond by next Summer could mean an 8% - 10% rise in the overall market.
Not a bad senario. Anyway, these are my thoughts, although I spoke with my former Economics professor from graduate school, whom I'm still in contact with. By now, he has retired, but still keeps up with everything, and I mean everything!!.
Later.
Mark |
