He shortly talks about the debt ceiling debacle and how developed economies are can-kicking, but then focuses on his "Seven lean years" prediction of 2009 where he saw weak growth of 2% per year, and analysis the positives and negatives as of today.
- Economic growth rates in emerging economy
- US / China Trade Surplus/Deficit has shrunk
- US Personal savings are up
- Corporate profits
- Disillusionment with Institutions, especially congress.
- Commodities price are higher than expected
- Balanced budgets now impossible without reducing spending or increasing tax or both
- Housing bust overhang to remain for years
- Modest personal income progress and large income disparities between the rich and the middle class in the US. (US Real Average Hourly Earnings Index is down over 40 years)
- Individuals must pay down existing debt
- Retirement plans (e.g. 401k) are not as good as defined pension funds
- Terrible economic policies stuck because Keynesian stimulus and Austrian cut-backs
- Risk of the US declining like the UK did in the past
In his Q2 newsletter, he predicted a market correction because of Libya, Japan and high commodities price, and still recommend to keep your head down until we reach fair value (S&P to 950) and hold shares of high quality companies.
Finally, he makes some buying recommendations:
- Managed farmland and forestry
- Commodities such as hydrocarbons, metals and fertilizer over a 10 year horizon. However, since there have gone up substantially over the last few years, waiting for a pullback maybe safer
- Quality Stocks
- Emerging markets
- Japanese Stocks