Worries To Come?
Tom Keene hosted a panel that just concluded at the Bloomberg 2010 Hedge Fund Conferencetom and his guests were John Ryding, Dennis Gartman and James Melcher.
John Ryding said that 3-4% GDP growth is doable for the U.S. economy. Ryding went on to say that when you have a small business, you see problems from running the business in terms of government issues. Small businesses have not participated in recovery because of health care mandates, and big business is getting all the breaks. Ryding believes the government should leave the private sector alone, and then it will reinvigorate itself.
Keene asked him about the deficit commission, and Ryding said there are some good ideas in there, particularly the scaling back of the tax rates. He said the problems with tax policy in country is the special interest groups which cause the tax rate to be high in order to generate a marginal amount of revenue. Ryding thinks the jobs recovery will be longer than he expected, and the country needs a pro business environment to help the country grow;.
What worries him is he sees potential for 10 yr yields around 6-7%. He is in the gold bull camp and he likes the Australian and Canadian dollars.
James Melcher says America isn't going to heal itself from the crisis. we had 40 great yrs from 1950-1990 in terms of industrial production, great labor force, and exporting constantly. Melcher says we might be in early stages of trade war. In order to help the U.S., the country needs a better education system, lower labor costs, and real estate costs, which are currently in the process of happening.
Melcher was asked by Keene if he shorted Ireland, and Melcher said he shorted CDS of Ireland about 3-4 years ago and its worked well for him. Melcher believes that Europe is a short, but he thinks this is temporary. He ultimate feels that the European Union will break apart.
One major shock that Melcher is looking for is a major bank bankruptcy, a terror alert and potentially Congress. He believes that Europe is on the verge of a collapse. He feels that we are setting up for a trade war. Melcher sees the potential for negative growth here. For 2011, he sees the dollar down against gold.
Dennis Gartman said that America is able to improvise and reinvent ourselves, which he said that if the Obama administration would just leave business alone, it would do eventually. Gartman doesn't want anyone explaining anything to the Obama administration, that he wants "Obama in a hole and to leave everyone alone."
Gartman said that the Midwest is doing better, but Detroit is a terminal case. He did say that other places like Cleveland are doing well, and Souther Virginia, where he lives is doing reasonably better. Gartman beleives GDP could be 3.5-4% soon as the country gets better, and this is doable for a long period of time.
Keene asked him why he picked on Belgium recently, and Gartman said that thinks Belgium is exemplary of the problems the EU has. He's astonished the EU has lasted as long as it has. Gartman said that Belgium is a walking time bomb and a microcosm of the EU problems.
Gartman went on to say that if you want to fix the housing problem, have foreigners buy citizenship.
When asked what scares him for 2011, Gartman said he sees potential for problems from North Korea. He concluded by saying he sees the dollar much higher against Euro.
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