Ask editor Stephen Leeb for a nearer-term market portrait. He’ll paint you a mostly sunny picture in which the landscape is dominated by “relatively” low resource prices – especially for oil.
He’ll also fill his canvas with a U.S. Federal Reserve that’s determined to boost America’s stock markets.
But encourage Mr. Leeb to step back a bit and twirl his paint brush around a longer-term scene – somewhere between six and 18 months out.
Then, his frame will fill up with dark overtones and menacing figures.
“It may take a miracle to hold things together,” he warns in between brush strokes, “both for stocks and the economy.”
And unless some current trends make an abrupt about-face, adds Mr. Leeb, “the U.S. and other developed countries will likely see living standards erode faster than ever.”
Painting by the numbers, we can easily see the reasons for his pessimism.
Worldwide – and despite the dramatic rise of emerging economies such as China – average annualized growth rates have dropped steadily over the last four decades.
Interestingly, Mr. Leeb points his brush to many of those same developing countries when looking for the cause of global economic decline.
“The developed world has paid a price . . . (as) developing countries gobble up an outsized share of resources.” And lord knows, China seems to have an insatiable appetite for coal, copper, iron ore and gold.
In turn, this hunger has become “a major factor in rising resource scarcities and hence economic woes.”
And unless fracking starts to show some staying power, or the U.S. “gets religion” in a hurry about renewable energy, “look for tougher times ahead.”
So don’t ask Mr. Leeb to paint a pleasant still life with flowers; instead, “gather those rosebuds while you can.”
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