What challenges and opportunities will the global economy offer investors over the next three to five years? We begin this week with a long-term look forward, as seen by the investment firm PIMCO. For his part, Double Line founder Jeff Gundlach sees long-term interest rates dropping back over time. Our next article from Business Insider discusses his recent presentation on the state of the global economy. Though the quantitative easing being practiced by central banks worldwide may lead investors to feel confident taking greater risks, John Hussman offers words of caution in our final article. It uses graphs to illustrate previous drops in the markets which occurred during times of persistent easing by the Federal Reserve.
PIMCO’s Secular Outlook– This article summarizes PIMCO’s views of the global economy and markets for the next three to five years. The secular outlook analysis identifies eight key themes for long-term investors, along with their portfolio implications. http://media.pimco.com/Documents/13-0470-01%20Secular%20Outlook%20El-Erian_GBL.pdf
What In The World Is Going On?– Jeff Gundlach, founder of Double Line, believes the Federal Reserve will continue quantitative easing for many years, although they may adjust the program from time to time. He believes the 10 year treasury bond yield will drop back to 1.75% by the end of the year. http://www.businessinsider.com/jeff-gundlach-june-webcast-presentation-2013-6
Following The Fed To 50% Flops- This week John Hussman wrote about an interesting disconnect between what investors believe about “fighting the Fed” (i.e., don’t do it) and the reality of S&P 500 returns. He leads off with a provocative fact: “… the last two 50% market declines – both the 2001-2002 plunge and the 2008-2009 plunge – occurred in environments of aggressive, persistent Federal Reserve easing.” http://www.hussman.net/wmc/wmc130603.htm
We hope you enjoy reading these articles along with us and that you find them informative. Please forward this to your friends and family.
John R. Day, Bill Ennis and Stephanie Davidson