Bernie Sanders and I share at least one attitude, i.e., neither of us trust Goldman Sachs. Of course, one of us does respect the research department of that investment banking giant. For example, here are some of their latest thoughts:
1. The GDP of the U.S. will drop from 2.4% last year, to only 1.4% this year and 2.1% next year. Both Japan and the Euro area will continue to grow at last year's pace for both this year and next. This suggests we are in the middle of a "growth" recession but not a "real" recession. (A growth recession is simply a slowdown in the rate of growth but not an actual contraction.)
2. Over the next twelve months, the U.S. stock market will appreciate a mere 2%, compared to 9% in Europe and a whopping 16% in Japan.
3. Interest rates (10-year Treasuries) will increase from 1.8% to 2.9% over that same period, over twice as much as the increase in interest rates in Japan and Europe. (This would be bad news for U.S. bondholders, but I don't expect rates to rise that much.)
4. The dollar will gain 4% against the pound and 16% against the euro but lose 20% against the Japanese yen.
5. Oil will gain 30% in value over the next twelve months, while gold will lose 21%.
There was also an interesting discussion, explaining the difference between millennials and baby-boomers. We senior citizens buy fancy possessions for status among each other, while millennials buy fancy experiences for the same reason. "Experiences could mean anything from a great weekend trip to a good education, running a marathon to a selfie with a celebrity. Experiences tend to be more unique and hence more likely to be shown off in front of friends."
Is it time to sell the Mercedes and take a vacation . . . or just get a face-lift?
1. The GDP of the U.S. will drop from 2.4% last year, to only 1.4% this year and 2.1% next year. Both Japan and the Euro area will continue to grow at last year's pace for both this year and next. This suggests we are in the middle of a "growth" recession but not a "real" recession. (A growth recession is simply a slowdown in the rate of growth but not an actual contraction.)
2. Over the next twelve months, the U.S. stock market will appreciate a mere 2%, compared to 9% in Europe and a whopping 16% in Japan.
3. Interest rates (10-year Treasuries) will increase from 1.8% to 2.9% over that same period, over twice as much as the increase in interest rates in Japan and Europe. (This would be bad news for U.S. bondholders, but I don't expect rates to rise that much.)
4. The dollar will gain 4% against the pound and 16% against the euro but lose 20% against the Japanese yen.
5. Oil will gain 30% in value over the next twelve months, while gold will lose 21%.
There was also an interesting discussion, explaining the difference between millennials and baby-boomers. We senior citizens buy fancy possessions for status among each other, while millennials buy fancy experiences for the same reason. "Experiences could mean anything from a great weekend trip to a good education, running a marathon to a selfie with a celebrity. Experiences tend to be more unique and hence more likely to be shown off in front of friends."
Is it time to sell the Mercedes and take a vacation . . . or just get a face-lift?
