Q: What is one investment theme which you are very confident in for 2010?
A: I am most confident in the notion that the consumer will be an albatross around the neck of our domestic economy and will be the principal force in producing a shallow recovery in 2010-11. The unemployment picture will remain weaker for a longer period of time than is expected as corporations do without more workers – so the general welfare of the all-important consumer will not improve much. Small business confidence and expansion plans will stay low because of tax, regulatory uncertainty and limited access to bank credit, so hirings will also disappoint from this important source.
For these reasons and others, decades of an aspirational and rabid spending U.S. consumer, who has had an almost unlimited amount of available financing -for the purchase of homes (often more than one!), goods and services – might now be coming to an end. The consumer might even retreat to the legacy that followed Americans after the Great Depression – maintaining the status quo will be their new objective. The comfortable and secure consumer will be one that has a lot in the bank not an extra handbag or automobile. Retail stocks should be shorted – perhaps even with impunity!
– “Exclusive Interview With Doug Kass”, February 8