As loyal readers know, I’m a bear on the economy and the stock market.
That said, there are some indications that the economy’s water level is slowly rising … as evidenced in light vehicle sales (cars and small trucks) and housing starts.
Source: JP Morgan Wealth Management
* * * * *
So, why my pessimism?
First, there’s no ‘next big thing” to drive growth … oil & natural gas production could have been “it”, but it’s been stopped in its tracks.
Second, there are the corporate behavioral factors.
Uncertainty has been been replaced by certainty.
Certainty that labor costs are going up (think, ObamaCare), that taxes are going up, that regulations are flowing out of DC at a record pace and that cash-on-hand is insurance against the next credit crisis.
I haven’t run into a single biz exec who is seriously considering hiring or investing.
They’re just responding to the slow rise of the economy’s water level by pushing productivity … and waiting for the next shoe to fall.
* * * * *
Follow on Twitter @KenHoma >> Latest Posts
The Homa Files 
January 10, 2013 at 3:55 pm |
Reason for optimism: achieving a negative rate of return by hording cash in a low interest rate environment isn’t a sustainable business strategy. The mantra on Wall Street is “if you’re not growing, you’re dying”; a smart biz exec will fund R&D to create the aforementioned “next big thing”