One of my biggest concerns for this year is panning out: The global economic recovery is foundering.
The economy is the lifeblood of corporate profit growth, so it is not surprising that the most hotly debated topic in the investment community is what the pace of worldwide global economic growth will be in 2014.
Many have interpreted the recent soft data as being weather-related. This group believes that the weak jobs number, in particular, should be dismissed and that the domestic economic growth rate will quickly return to robust growth we saw last year once the weather distortions have been passed.
Others view the strength in the November and December economic releases as a head fake, believing that overall economic activity is slowing.
I unfortunately am starting to think that 2014 will be a disappointing year for economic activity, even adjusting for the adverse impact of weather. I believe the reality of slowing growth will expose the many concerns I'v written about and will produce a period ahead of subpar growth that is not anywhere near the continued economic growth many are predicting.
Here are some of the reasons I am of this view:
· Jobless claims are rising, underscoring the uneven progress in the labor market.
· Retail sales are weakening.
· Away from the Northeast sector, which is crippled by foul weather, housing traffic and orders have been stagnating for months.
· Capital spending remains moribund
· Forward sales guidance, upon the release of fourth-quarter results, has been weaker than what the consensus has expected.
While today is Valentines day which is supposed to be full of happiness and joy (unless you're a man and have to shun out money for gifts and an expensive dinner), I hate to be downtrodden and somewhat negative. Despite what I wrote above, I still believe that money can be made by being opportunistic in this market that is volatile and has no memory from day to day.
Happy Valentines day :-)
