The “Great Recovery” Is A Big Fat D.U.D.D.

We hosted our Mid Year Outlook for investors yesterday.  Slides from the call are available below.  Broyhill Bottom Line:

Buckle your seatbelts kids.  We are headed for a bumpy ride ahead.  Our portfolios are positioned accordingly, as the Great Recovery appears to be a big fat D.U.D.D.

  • Double Dip in the economy and in domestic home prices as we pass the peak effects of monetary policy and fiscal stimulus at the same time the inventory bounce begins to fade ahead of major tax increases next year.
  • Unemployment is structural in nature and rises on average for five years following systemic banking crises.  The “boost” from census hiring is now in the rear view mirror.
  • Debt levels across the private and public sectors have reached a choking point, in which greater levels of debt act as larger and larger speed bumps for economic growth.
  • Deflation in asset prices (particularly from today’s overvalued levels) is the result of private sector deleveraging, which leads to distressed selling, a loss of confidence and a further contraction in the velocity of money.

Broyhill Mid Year Outlook (Jun-10)