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With the Fed’s announcement this week that they would ease further to buoy the country’s economy, a number of top Wall Street economists tweaked their calls for growth.Other analysts and pundits thought the Fed’s actions would endanger the country and fuel hyperinflation.
'If you're going to own a currency, it's not sensible not to own gold. Now it depends on the amount of gold. But if you don't own, I don't know 10%, if you don't have that and that depends on the world, then there's no sensible reason other than you don't know history and you don't know the economics of it.'
He noted high-flying stocks like Apple are at risk of capital gains taxes. In other words, those holding Apple stock are probably sitting on huge unrealized profits that will be taxed when shares are sold.
Generally, this brand of risk isn't a very big concern.
However, Gundlach expects taxes to soon rise as part of the government's efforts to reduce debts and deficits.
'It is very interesting to hear how pundits talk about the cult of equities being dead. I wrote about this recently, but realise that this line of thinking isn't entirely accurate ... American households still have 42% of their entire asset mix in the equity market ...That is actually slightly below historical norms, but well within the range of the past. There were many other periods when stock market participation was lower.'
JPM: The Floodgates Are Open, There's Fiscal And Monetary Stimulus Everywhere, And Markets Can Surge For Another 6 Months
'We think the positive environment for risk assets can and will last over the next 3-6 months. And this is not because of a strong economy ... More important to us as positive drivers of risk markets are coming policy stimulus measures, price momentum, and the continuing but more medium-term forces of asset reflation and high risk premia.'
'However, the sudden slowdown in China's exports--mostly attributable to the recession in Europe--is forcing China's leaders to scramble to boost domestic growth. Their immediate reaction over the past two years has been to raise minimum wages. That's crushing profit margins, which tend to be razor thin even when all is going well.'
Well, I used to forecast home prices, and I thought a year - once you have a year - this is what I used to think, and whether it's still true, but...
But once you have a year of solid price increases, you are probably off to the races for some years. So yeah, but we're not into it that long yet.
Had Germany stretched itself further in the beginning, the reforms would have worked, and Germany would not have lost any money.
Now, he says, 'It's 5 minutes past midnight.'
And in the Germans' obsessiveness about avoiding inflation (owing to the trauma of the Weimar era), they have now created a housing bubble in Germany, thanks to the rush of safe-haven flows into the German republic.
'For China, we reduced our 2012 growth forecast to 7.4% from 8.2%. This is now below the consensus of 7.9%, and means that China will need to achieve a 7.2% yoy growth, on average, in H2 of this year. While this growth rate is just below the government's 2012 target, the degree of policy response has been less than envisaged.'
'Our 2013 year-end target of 1600 implies a 10% price return, where most of the appreciation can be attributed to earnings growth of 7% next year, along with modest multiple expansion from 14.2x to 14.7x on trailing earnings, still below an average PE of 16x. This would represent a new all-time high for the S&P 500, surpassing the 1565 level reached in October 2007.'
''Economic and earnings expansion is likely even as margin concerns persist. With a helpful credit basis, one should expect improvement in capital investment, industrial production and employment to sustain US GDP development which then underscores a modest EPS growth rate to $108 in 2013 (up from $103 in 2012), which puts Citi within the broad consensus top-down estimate range of $105-$110, albeit lower than bottom-up expectations of 10%+ growth.'
'Profit warnings this week from bellwethers FDX and INTC are not comforting. We remain confident in our 1500 12-month target, which has upside on positive US tax policy and EM reacceleration, but our 1475 year-end price target is beginning to look at risk despite the market's recent steps toward it.'
'I don't know how many years we still have, but you can assume that central banks will, as the ECB stated just recently, will do everything necessary to prevent a collapse of the system. That means they will even finance bankrupt governments, they will finance bankrupt banks, they will finance every bankrupt entity that is important to the system.'
'Some believe that our own Weekly Leading Index contradicts our U.S. recession call. This is not the first time that charge has been made ... Today we can tell you that the Weekly Leading Index is not pointing to recovery and, more importantly, this is also the message from our full array of leading indexes.'
'As soon headlines such as 'the ECB no longer supports Spain as it does not meet its commitments' hit the wire sovereign yields would soar, the country would be denied market access, raising the question of default and its systemic effects on the euro area banks. This would have potential spillover effects on other fragile countries, such as Italy.'
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