Stephanie Pomboy(Treasuries & commodities)

http://online.barrons.com/article/SB122912505428802977.html#articleTabs_panel_article%3D1 Found this old article. She's saying similar things today. Interesting read... I like the the idea of slow growth and dollar debasement. Still haven't reconciled dollar decline and no inflation... What domestic GDP growth will we get? In terms of nominal GDP, I see it being around 1% for a long time, five... [more]

http://online.barrons.com/article/SB122912505428802977.html#articleTabs_panel_article%3D1 Found this old article. She's saying similar things today. Interesting read... I like the the idea of slow growth and dollar debasement. Still haven't reconciled dollar decline and no inflation... What domestic GDP growth will we get? In terms of nominal GDP, I see it being around 1% for a long time, five years for sure. One thing to consider is that after the dot-com bubble burst, it took the corporate sector five years to get back to the 2000 peak for capital expenditures, and employment never got back to that level. And the tech bubble was nothing as a share of total assets compared to housing on household balance sheets. This is so much larger. If it took the corporate sector five years to recover from the bursting of the dot-com bubble, to suggest that it would take five years for consumers to recover from this seems like a very conservative call. What about unemployment? Having the standard unemployment rate at 10% is definitely a possibility, though it does depend on what is done in terms of the state and local governments, which are 13% of total employment. But they have been the only area that is growing right now in terms of employment. Where do you see rates going? I have been bullish on Treasuries, and I did feel silly sticking with that view, because I'm really squeezing the last couple of basis points out of a multi-decade bull market. Having said that, looking back at the charts of JGBs [Japanese government bonds] in 1989, I am certain no one back then thought JGBs would ever yield under 1%. And here in 2008, even in the dark recesses of my bear cave with all the other growling bears in there, nobody believes that could happen here. There's this sense about how horrible it is that Treasuries have been able to get to these low yields, and I totally agree. We are really abusing the privilege of dollar hegemony by printing all this money. But if I'm right and the whole economic deleveraging is still to come, you might get a selloff in Treasuries on this short-term rally in riskier assets. Then, the next thing you know, people will say, "Oh, wait. Consumers aren't coming back to the trough, this is a problem," and the market will sell off further. So on balance, I wouldn't short Treasuries. Where do you see opportunities? In terms of absolute returns, it is going to be very hard to come up with really compelling ideas. I like hard assets in this environment, gold in particular, where basically the major currencies are all being debased. I also think emerging markets, on a relative basis, are going to do much better than developed markets are. We are all hanging on the edge of our seats to find out if China can pull off keeping its economy going while the rest of the world goes down the tubes. This shock-and-awe stimulus that China is applying to its own economy certainly speaks to its urgent motivation to ensure that its GDP growth stays at 10%-plus. So with the arsenal of foreign reserves they can continue to tap to support growth, I would be looking at going long equities in emerging Asian countries, including China, as well as commodities, which move hand-in-hand with emerging markets. [less]