Our Macro View (March 31, 09)
We at The Anonymous American invest in two separate mindsets: the first is the macro mind set and the second is the micro mind set. The macro strategy evolves more slowly and takes positions based on our long term, global ideas and beliefs. The micro mindset is based on short term trends and chart patterns.
For more information on both our macro and micro investment ideas, please sign up for a membership and you will receive access to more detailed updates on our ideas.
In general, our macro view is that both America and China will weather this current financial storm much better than the "Euro Zone". In fact, we have recently called for a Euro collapse sometime in the next 2 to 5 years. This idea is not exclusively our own; it has been previously called for by economists (including Milton Friedman and more recently The Economist magazine) across the globe and prior to the creation of the Euro. We will continue to hold reserves of US Dollars until the Euro breaks up or dissolves. At such a time, we will look to sell out our dollars on what should turn out to be a squeeze to the upside as European capital flows from Eurodollars to dollar denominated assets.
The primary reason for calling for a Eurodollar collapse is the inflexibility for which the Euro allows. The Euro itself is set up for good times and will not react well in uncertain or volatile financial periods. We expect the USA and China to continue to gain share in the world's export market as both their currencies weaken; we also expect the Euro to stay strong causing the Euro Zone to be unable to export goods. The inability to export goods and services will lead to the Euro's eventual collapse.
We expect the dollar to weaken over the next five years and take the value of the Yuan with it, since they are partially linked. This weakness in the dollar will lead to an increase in American exports which very well may lead to a second industrial age in America. China will continue to act as the engine for export growth and manufacturing in the world; and this will continue to mask the inflation caused by a weakening dollar in the US.
We expect more civil unrest in the world, which will lead to a continued growth in the manufacturing of military equipment in the US. We feel that this growth will be expedited due to the weakened dollar making US weapons makers as affordable as their inferior French and Russian competitors.
We expect a significant power grab in the US by state government causing a battle over taxation between the states and the federal government leading to an ever expanding government spending program.
On a macro basis, we like silver over gold. We like palladium as a long position in the auto industry as a whole, as opposed to betting on any one "lame horse" within the sector. We are slowly moving investment funds into Asian countries mainly China, looking for dips to buy. We believe that stocks may become cheap enough to buy in the U.S. on a macro view but expect enormous volatility in the short-term.
We will update this very brief Marco opinion as data and facts continue to change. For a more in depth look into both the macro and micro economic situations sign up for a free membership today!
