Post Election Economy

Yesterday, I enjoyed an amazing seminar by Mauldin, Yamarone, Shilling, Ritholtz, and El-Erian. Yes, all together. I want to sum up what was said there.

John Mauldin started first. He expects Japan to explode in... 2013. Sooner than what we thought. Most of them said the famous fiscal cliff was not so important, but debt as a whole.

Shilling said that if a bank fails in Europe the contagion will occur via derivatives. That's the main issue. He said USA will soon be energy independent, but, as it's not isolated from the rest of the world, it could suffer changes in oil price.

El-Erian (PIMCO) explained that this time is in fact different. He thinks under this "new normal" we are living, politicians are being non-functional and thus creating a very unstable world. Diversification is no longer a valid way of hedging risks, and investors should manage their risks very actively. Mauldin is expecting first deflation and then inflation. El-Erian thinks that in 3 years we will start seeing inflation. However, he thinks the "sweet spot" for bonds will be in 5-7 years.

Yamarone doesn't think low interest rates are going to create any jobs because service jobs (majority now) are resilient to interest rates.

Ritholtz suggests the following investing ideas: 1) ETFs with no Europe, no USA, with dividends, 2) telecom companies in Asia and South America, and 3) energy stocks. On the the hand, Shilling is just expecting deflation, so he is long on Treasury bonds and dollar and short on stocks and commodities.

Very interesting data: Japan 2013, inflation in 3 years.