Mike m- Do ever read Roach? Do you agree with his last piece?
If so, I see no way that earnings growth can support a legitimate secular bull (given what SHOULD happen over next few years)...it IS possible that the Roach "scenario" could support a cyclical bull, but it would be fairly short in duration IMO (less than year), and certainly difficult to see too much more (10%?) from current levels. It would likely have to be squeezed in BEFORE a massive unwind of the "US buyers of last resort" deal which we all lived under during last bull, and which is being unwound as we speak.
The alternate approach to Roach (what I think Zeev basically espouses) is an economy that is "propped" to avoid a deep recession, but leads to years and years of overhang and not great growth, and shallow recessions....again, under this scenario, i also see a very difficult environment for the kindof turnaround rapid earnings growth that you normally see once (after) a secular bull gets cranking....we are going to have an environment, then, similar to the last year or so for many years (under scenario "2")..The earnings are just not going to justify huge increases in equity prices (unless you are arguing we are starting from a point of severe undervaluation- which argument I'd love to hear)
Roach may wind up wrong, simply because Germany/Japan may NOT make the systemic changes necessary, and will be stuck with worst of both worlds- stronger currency AND systemic drag....and where the hell would that scenario put the US and its potential growth?....not too pretty I say for a secular bull..
What is your "scenario" for the fundamentals of a secular bull? How is that going to occur? Where is the basis of huge pent-up demand (in aggregate)? Car industry?? Housing?? Tech??
AI
