Battle over projected economic growth between the fixed income folks and stock analysts has resulted in some wide variations. Choices range between the 2% "new normal" with a deflation twist, or the much stronger projections by equities folks and their vision of a new profit cycle. It is hard to fight people such as Bill Gross of Pimco, who coined "new normal", since he has probably been the best trader on the macro side over the last two years. He is buying long term treasuries and believes the economy is just not going to have the ability to muster any sustained push due to the huge inventory of bad debt and increased tendency for public savings. The stock market insiders see great performing companies, cash on the sidelines ready to roll, and M&A activity rebounding.
Now Gross is always talking his position on Bloomberg but his outlook is a bit more realistic than the stock pushers who have had proven quite dramatically their skills rely on a great underlying secular bull, which they had for so long. The buy and hold mentality of a generation will have its moments for shorter periods, but the new dog has a much shorter chain and there is not much slack left. Besides, investing will mean trading more frequently over the coming years and that is not a model used to gain the public's confidence or an eagerness to invest. In and out is hard for 41Ks but easier for the trading industry. So a much more rolling trading affair will wear on the general investing public as their long term investments stay flat as Pimco's prediction of modest growth presents few opportunities for increased employment and overall economic expansion.
