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Depression 2009? Bearish on America

Posted May 4, 2008

by Laura Cadden

Baltimore — (TFN): Laura Cadden: Since late March, stocks have made up for some lost ground. Not just in the United States, but also in Hong Kong, Japan, Germany and Britain. Company earnings, especially from internationally diversified firms, have been rising as strong foreign revenues have made up for lagging U.S. sales. Is this the beginning of a turnaround?

My guest today is J. Christoph Amberger, Publisher Emeritus of Taipan and Executive Publisher of TFN. Thanks for being on the show, Christoph.

***Watch the Financial Video!

J. Christoph Amberger: My pleasure.

Laura Cadden: You have always been bullish on the U.S. economy, as we all know. What do you think is there right now in the recent trend reversal that you’re seeing?

J. Christoph Amberger: We have seen the Dow Jones and the S&P recover from their first-quarter losses primarily due to, as you mentioned, the foreign currency earnings that are very well publicized in the case of Coca-Cola (KO-NYSE) and Ford Motor Company (F-NYSE) and so on.

We have had buyouts and mergers and we have, of course, the big government cash hand out coming on. So, I believe there is a turn-around. But how much legs it will have is still to be seen. I am not betting the farm on that.

Laura Cadden: Are you turning bearish on us?

J. Christoph Amberger: Well, I think the U.S. at this point is approaching a cultural and political and economic turning point. Unfortunately, I think the shift — especially the one indicated in the economic programs of the “most likely to succeed” in the race for the Presidency — is not in favor of the U.S. economy.

In fact, I think that political shift will put the U.S. economy and U.S. business at a competitive disadvantage within the global economy. After all, it is also called caravan capitalism.

If all these elements, if even half of these program points are implemented, we will see further migration of U.S. jobs abroad, followed by actual relocation of American companies to more business-friendly jurisdictions.

Laura Cadden: So if this were to happen the way you say, what would that mean for the global economy?

J. Christoph Amberger: Keep in mind America is still, even in a recession or in an economic downturn, the world’s most prosperous and highest consuming country in the world. America has bankrolled the economic boom worldwide — in Europe, in Japan, in China and India. China is not even close to the level of prosperity that we have in America.

Once the main customer for all those export products start tightening belts is no longer having the disposable income to spend it on Chinese imports. The Chinese do not have the domestic consumption base to keep it up.

I believe we are in for a prolonged global recession, if not a global depression within the next three to five years.

Laura Cadden: Hm. Well what about oil and resources? Where do you think they’re heading?

J. Christoph Amberger: I think oil and natural resources currently are a very worthy successor to the market bubbles in internet stocks and in real estate. Bubbles are a wonderful environment to make money as long as you keep in mind that they typically pop and may erase whatever advances they have made within a couple of days. So: A beautiful place to make money if you have your stop-losses set.

Laura Cadden: Do you think that’s the best place to look for opportunities right now?

J. Christoph Amberger: Well, I think we have some short-term and medium term opportunities. For one, again the foreign earnings of well diversified international companies, Ford, Coca-Cola and so on, will provide positive surprises that will translate into stock price appreciation.

Your recent stock pick of Unilever (UN-NYSE) is probably one of those companies that will benefit from that. I think they are great short-term profits and another pick of yours, CTrip.com (CTRP-Nasdaq) that is betting on –

Laura Cadden: China online travel.

J. Christoph Amberger: — China travel to the Olympic Games. Also, Brazil at this point represents a very strong base for profits, both in regard to their companies and in regard to Brazilian stocks that are traded in part on American exchanges.

Laura Cadden: So do you think investors should go ahead and plunge into these things or what do you think the best strategy is right now?

J. Christoph Amberger: Well, its’ certainly — the worst strategy would be to cash out of the market. I think you need to move with the market. You need to set stop losses. You need to observe them very tightly because at this point I believe it will be very hard to make up for lost money in the stock market.

But you also should adapt a longer view by beaten down stocks with solid fundamentals, with demographic tie-ins. I mean the aging of the baby boomers presents a set of opportunities as does the maturing of the echo boom generation. So there will be pockets of opportunity.

I also think you need to reassess your financial structuring. We’re looking at a high tax business hostile environment in the States. I believe it’s time to look at your offshore relocation of at least part of your assets.

One of our sister organizations, Sovereign Society, is actually putting together a very high carrot meeting to discuss strategies and so on in Panama City in May.

Laura Cadden: The Total Wealth Symposium.

J. Christoph Amberger: Total Wealth Symposium. If you can, make sure you get there and read what you can do.

Laura Cadden: It’s May 14th through the 18th.

J. Christoph Amberger: That’s right.

Laura Cadden: That’s a good idea. Well, thank you very much for your insight.

J. Christoph Amberger: My pleasure.

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Posted by Laura Cadden · Filed Under Investment Strategies, News that Matters 

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