Economist: Signs Point to Impending Stock Collapse
Zimmermann talks bubbles, climate change, energy independence, Putin, Fed at NACS SOI
ROSEMONT, Ill. -- A combination of unprecedented weather, potential hostility from Russia and moves by the Federal Reserve to artificially inflate the value of stocks lead to or are symptomatic of yet another economic bubble--one likely to burst as dramatically as did the housing and the dot-com booms of year's past, according to one economist.
Addressing attendees at the NACS State of the Industry (SOI) Summit, Walter Zimmermann, chief technical analyst at United ICAP, Jersey City, N.J., said many signs point to the growing bubble, including a rising trend in stock prices that resemble the lead-up to other historic bursts, as well as the sluggish state of telltale commodities like copper and gold, which in a true recovery would be doing better.
"It's probably not time to sell yet," Zimmermann said. "But when the bubble bursts, it's never a slow leak."
As with walking on thin ice, he advised convenience store retailers to get out when they start seeing signs of selloffs, such as a move by investors from high-risk to more secure buys.
Climate change will ultimately affect retailers in the coming year, Zimmermann said. With many in the room affected adversely by the extremely cold winter, he said that many of the signs point to a yet another repeat in 2014 and 2015. He suggested that warming temperatures have affected the Earth's jet stream, a current of wind that keeps cold air in the north from drifting downward. Climate change has allowed that buffer to weaken, setting colder air down into cities in the Southeast.
Not only did such weather directly affect business by forcing people to stay home, but it also had an effect on the price of heating fuels and distillates. These fluctuations forced many of these prices up, despite what he called the "myth" of energy independence. "Energy independence does not mean cheap energy," Zimmermann said, noting how global demand caused many refiners to export their finished product, and the cold weather only drove prices for natural gas and electricity higher.
Zimmermann also focused on what he believed to be another global instability in Russia, and its lead politician, Vladimir Putin. He referred to Putin as a "thug" and called Russia a "criminal" country. He said Putin's actions in the Ukraine have a destabilizing effect on the global economy and action on the part of other countries is justified. "He should be told, 'No'."
But by far the most destabilizing factor affecting the economy of the United States, according to Zimmermann, is the Federal Reserve. Saying that it was created 100 years ago for the benefit of the banking class, and has showed its colors time and again in its decisions to prop up the banks back in the late 2000s and its purchase of mortgages held by the banks in the years that followed. These types of actions, including its purchase of stocks as a way to fuel lower interest rates, run counter to what's actually good for the nation's economy.
For more on the economy from the National Association of Convenience Stores' 2014 SOI Summit in Rosemont, Ill., see Related Content and watch for additional coverage in CSP Daily News. CSP Business Media is the exclusive media partner of the event.