JEFF SAUT: CONTINUED VOLATILITY, BUT NO RECESSION COMING IN 2012
From Jeff Saut’s latest weekly letter. He says no recession in 2012, but continued market volatility. He lists a slew of reasons why he doesn’t foresee recession (via Raymond James):
“Unfortunately, we expect the volatility to continue in 2012.
Speaking to 2012, I remain steadfast in the belief there will be no recession, nor will Euroquake pull us into one. I also embrace the theme that the nation is moving in the direction of energy self-sufficiency and that an American manufacturing renaissance is taking place. Moreover, there appears to be the hint of a housing recovery, as well as a technology revolution. Combine these beliefs with the demographics of a baby boom echo, which should foster a new cadre of investors, and I think the SPX will have a mid- to high-single-digit return in 2012. If you layer in a 3-4% dividend yield on top of said return, the allure of equities becomes pretty compelling.”
Source: RJ
That “hint of a housing recovery” is construction of rental units.
http://www.msnbc.msn.com/id/45795076/ns/business-real_estate/
Bernanke has been bailing out the European banks for a while now. He is just not doing it in an open forum; hence, no QE3.0……. So, maybe no Euroquake in a doomsday prophecy, but if one still believes in valuation…………
The key question is will profit margins keep on increasing? Corporate profit growth seems to have stalled for the moment, although lower commodity prices will help profitability. I would bet that 2012 will see gradual “reversion to the mean” in corporate profitability, which means a stagnant stock market.
When he said “new cadre of investors” shouldn’t this just replace the “old cadre of investors” who have fallen off the Wall St. BS Ship which never got them to their destination promissed?
He better hope the old cadre doesn’t talk to the new cadre of their “cruise” on the Wall St. BS. Maybe if he throws off the old Cadre or leaves them on an island with no communication the new ship of fools won’t know what lays ahead.
This Bear Market has unfinished business. This new cadre of investors has access to alot of technological information(TPC, TBP and so forth) They don’t need or want what Wall St. has to offer. They will be buying what they want not what you want them to buy Raymond James. This is a wonderful thing.
VII – I am not sure how familiar you are with Raymond James, but it’s a pretty significantly different culture to “Wall Street.” While John Thain was spending a million bucks to renovate his bathroom while his company was going under, the CEO of RJF at the time was still using the same office furniture his father (founder of the company) bought almost 40 years ago.
As I understand it, they dodged Madoff, Lehman paper in their money market fund and subprime loans in their bank mortgage portfolio. They’ve reaped something like 95 consecutive profitable quarters because of their investor-oriented and conservative focus. Disclosure: I’m a shareholder.
I hate to see good people lumped indiscriminantely with the bad just because they happen to share a profession or geography. The same should go with companies.
@ perpetual neophyte
Thanks for your insight. I don’t know enough about their culture. You seem to have an affinity for them and well that’s enough for me.
Seems my prejeduce toward the ST. has reached epic proportions.
I do have a different view of 2012. I think I’ve beaten that dead bull enough. With that….I have started reducing risk and raising cash today. 40% cash…only equity exposure I have today is what ever PAUIX holds.
I’m now picking my nose until spx 990.
Thanks for your input on RJF it helps others here.
More on-topic re: the Echo Boomers as a cadre of investors. I wouldn’t count on them any time soon in terms of equities given the unemployment situation and risk aversion of their generation. I suppose they could see a push if they are all dumped in to equity-heavy “target date retirement” funds by default in company 401k plans..
Article on Gen Y and investing:
http://lifeinc.today.msnbc.msn.com/_news/2011/12/22/9634352-gen-y-out-investing-gen-x-boomers
It’s just an opinion poll, paid for by TD Americatrade. I’d rather see data on where Gen XYZ actually put their investments and at what rate.
Most interesting stat in there is this:
“These results are based on a survey conducted by Maritz, Inc. on behalf of TD Ameritrade Holding Corporation. 1,509 adults between 22 and 81 years participated in a telephone survey from July 20 through August 17, 2011. Among these respondents, 854 are working full-time or part-time.”
That’s a pretty low labor participation rate…, and that’s the number everyone should get focused on.
I personally think Jeff Saut is drinking some kind of “”kool aid”. “”No recession”" ????