Title: I’m Mad As Hell: Conclusion

Morris Segall      economic, economy, government, investment, NASDQ, recession, recovery, stocks

In a recent article published March 23 for SPGTrend.com subscribers, we examined the social and political toll of the current recession and their longer term impacts on the U.S and overseas economies.  Over the course of several blog posts, we will take you through the content of this piece and put what we’re going through into context.

In part one, we outlined an introduction for this series.  Part two discussed the first four trends and developments.  Part three discussed public anger.  Part four discussed the declining economy causes spiraling stress.  Part five discussed the long-term implications for the recession.  And now we will wrap up this series with some concluding thoughts:

We expect the U.S. recession to end later this year and gradually begin recovery next year and accelerate through 2011, 2012 and 2013. The U.S. recovery will stimulate the export dependent economies overseas and they will recover accordingly.

After a strong cyclical recovery, the U.S. will settle into a stagflationary economic cycle characterized by a secular high level of unemployment, lower worker productivity, a resumption of higher energy, food and commodity inflation and slower consumer income growth and spending.

High deficits, increased entitlement spending, increased interest rates and a depreciated currency will deteriorate U.S. government finances.

Emerging markets overseas in Eastern Europe, Asia and Latin America will again pace future long-term economic growth.

Americans will shift politically to the left as they become more dependent on government spending for basic needs and income.

Populations in mature industrialized economies will shift politically to the right as they become more nationalistic to protect jobs, companies and existing social welfare programs. They will also be less inclined to pursue free trade in the future.

Free trade will still be important to emerging industrialized economies as they continue to pursue export oriented economic growth and employment. This will increase tensions between the mature economies such as Western Europe, Japan and the U.S. and the emerging economies of Asia, Latin America and Eastern Europe.

From a capital markets standpoint, we remain defensive in the short term as we look for evidence of an economic bottoming. However, we would prepare to emphasize common stocks, particularly large cap and NASDAQ U.S. stocks to participate in a bottoming in the recession and subsequent economic recoveries here and abroad. We would also increase our positions in gold and other commodities as the world economies reflate and commodity prices increase. Concomitantly, we would avoid bonds as they will see a shift in cash to stocks and an increase in interest rates in an economic recovery.  Please contact us with any questions regarding this article and for specific recommendations on your investment program.