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"The Illusion of Prosperity": U.S. Destined to Lag Rest of the World, Peter Boockvar Says

Posted Nov 19, 2009 09:00am EST by Aaron Task in Investing

"It's dangerous to be short this market," says Peter Boockvar, equity strategist at Miller Tabak.

Despite a penchant for bearishness, Boockvar says the rally can continue as long as the Fed keeps rates at zero.

"When you cut rates to nothing you're encouraging people to take risk," Boockvar says. "As long as asset inflation is [the Fed's] goal, the market could go higher but there are obvious consequences," including inflation, as discussed here.

The Fed is trying to create "the illusion of prosperity" by fueling asset price appreciation, Boockvar says, staying true to his reputation as a deficit hawk. Even if the U.S. stock market keeps rallying, "non-dollar assets" like commodities and emerging markets will continue to outperform, he says.

Unlike the U.S., emerging markets are "not weighed down by enormous debt levels" and local consumers are "much better off" than their American counterparts, the strategist says, expressing a strong preference for China.

"If you want exposure to global growth, it's going to be outside of the U.S.," he says, recommending the following:

  • Follow the Money: Buy China-specific and Asian ETFs or mutual funds.
  • Go for Gold: A longtime gold bull, Boockvar says a correction could be coming because "the trade has gotten crowded" and Ben Bernnake's recent comments about the dollar could spur a reversal. But "buy on any sharp pullback," he recommends, suggesting gold is very likely to revisit its inflation-adjust high of $2300 "in the next few years."
  • Reject Domesticity: Avoid U.S. retailers, REITs and consumer-focused financials, Boockvar says, suggesting the U.S. economy and consumers will be under pressure for the foreseeable future. "If you want to invest in US, invest in companies with big exposures overseas," he says. "The growth is not going to be there in the U.S. "

211 Comments

hadenoughgov
hadenoughgov - Thursday November 19, 2009 09:08AM EST

Yup this is what you get when your leaders are globalists first and Americans second we need to vote these bums out of office as fast.. as possible

william
william - Thursday November 19, 2009 09:09AM EST

listen to this man people.... jump on the train.... lest we forget... taking risk is the foundation of America... for those of you whining... you're going to get creamed.... see ya... choooo choooo

Rey
Rey - Thursday November 19, 2009 09:10AM EST

The FEDS and GS are so MANIPULATING The Market to keep the traders and little fish with blinders // Once they decide to make the killing by selling all the rug will be puled from erybody's feet and all of you will lose your A$$ /// Wake up america // one tiny bit of good news and they latch on to that to keep the market going up // They can't see all the bad news because they have their heads up their A$$

Brian
Brian - Thursday November 19, 2009 09:11AM EST

This guy has some things right. But US companies and retail will also benefit from the so called wealth effect. Monetary policy works that's why the FED is using it.

san
san - Thursday November 19, 2009 09:13AM EST

Neither debt nor inflation are growth. But your government thinks it is! :D

Trevin
Trevin - Thursday November 19, 2009 09:14AM EST

Buy, buy, buy!! Everything is great! We ONLY lost a half million jobs last week. My health care bill is going to reduce the deficit. It will be free! We're going to win in Afghanistan. We'll close GITMO soon, I promises. We are going to save the world from global warming and inflation will never go up. We've only increased the money supply by 130% in ten months. Everything is great. Now get out there and campaign for me.-------Thanks, Obama.

Fronz
Fronz - Thursday November 19, 2009 09:18AM EST

Hey at this rate we will be back to DOW 14,000 in no time - just like nothing bad happened at all, yea right!

Yahoo! Finance User
Yahoo! Finance User - Thursday November 19, 2009 09:19AM EST

Pete is right on with this interview. American Business is focusing strictly on the world economy and abandoning its citizens financially. The money will be made overseas.

sirdon2
sirdon2 - Thursday November 19, 2009 09:22AM EST

Dear Congressman, "We the people" have tried to find jobs that the stimulus was suppose to create, we have tightened our belts, lowered our expense and still are struggling. "We the people have see that Government only knows how to spend and has lost touch with " WE the people" "We the people" have taken cuts in pay, had our benefits reduced, and have still lost our jobs. "We the people" have watched as Government has increased spending, taken trips, enjoyed the fine life. "We the people" would like to see Government take pay cuts, loose benefits, and pay for their own health care. "We the people" demand better from our Government, "We the people” are angry, hurt, and disappointed with our Public Servants. "We the people" want our Government to remember who are "We the people", right wingers, tea baggers, Democrats, Republicans, Independents, Housewives, Teachers, Electricians, Farmers, Business owners, Construction workers, Janitors, Barbers, Gas station attendants, unemployed, retired, etc.... "We the people" means all of us not just Party Affiliates, Bankers, Stock brokers, Unions, and Associates. "We the people" will be heard and our votes will show that we care what our Public Servants do for " We the people".

william
william - Thursday November 19, 2009 09:24AM EST

people.... some of you don't get it..... the world is leaving America behind.... America is no longer top dog.... that's why government has to look to global policy no longer domestic only.... the Glory Days are over... get on with the new world order.... buy gold hedge against the future... choooo choooo

Yahoo! Finance User
Yahoo! Finance User - Thursday November 19, 2009 09:25AM EST

"O"ne "B"ig "A"ss "M"istake "A"merica

Terry
Terry - Thursday November 19, 2009 09:27AM EST

I call it "DELUSIONAL PROSPERITY."

Terry
Terry - Thursday November 19, 2009 09:31AM EST

hadenoughgov - Thursday November 19, 2009 09:08AM EST Yup this is what you get when your leaders are globalists first and Americans second we need to vote these bums out of office as fast.. as possible. /////////////////////////////////////////////////////////////////////////////////////////////////////////////////// I'm with you. VOTE OUT the INCUMBENTS in 2010.

George
George - Thursday November 19, 2009 09:32AM EST

As any good magician knows, if you want to do a trick with your right hand get the audience to focus on your left hand. The govrnment is propping up the stock market to divert attention from the Federal deficit, unemployment, bank closures, etc... In October 2007 when the Dow was over 14,000 not very many investors had an exit strategy ready. Now we have a dollar bubble forming and it would be prudent to get your exit strategy in place if you haven't done it already.

asdf
asdf - Thursday November 19, 2009 09:34AM EST

We have been prodigal and are paying the price. To modify an old saying, shirtsleeve to shirtsleeve in two generations. The technology revolution is petering out and will not fuel future prodigality.

Terry
Terry - Thursday November 19, 2009 09:34AM EST

I will be traveling for more than a week, so is there anyone that will take up the cause I've been posting? If so just copy and paste the text as I welcome your help. ////////////////////////////////////////////////////////////////////////////////////////////////// These people in Congress need to be replaced and we the voters need to impose the term limits that they will not impose on themselves. No Senator should be in office more than 2 terms (12 years) and no Congressmen/women should be in office more than 3 terms (6 years) otherwise they do too much harm to us all. VOTE OUT the INCUMBENTS in 2010.

Yahoo! Finance User
Yahoo! Finance User - Thursday November 19, 2009 09:35AM EST

who is this chooooo choo clown. i think his head is up his a$$

Yahoo! Finance User
Yahoo! Finance User - Thursday November 19, 2009 09:36AM EST

When U.S. standard of living catches up to where the growth is the new American Dream will be a devastating reality. Do some research on living where people are celebrating progress....

william
william - Thursday November 19, 2009 09:41AM EST

yfu..... who is this chooooo choo clown. i think his head is up his a$$///// really??? chooo choooo

Yahoo! Finance User
Yahoo! Finance User - Thursday November 19, 2009 09:45AM EST

The 25 year party is over. It was a good party though, and if you missed it, or didn't even know it was going-on, then you missed the biggest phony party rallies in history. But the party is now over and the clean-up crews will be sweeping-up the mess for decades to come. So, what can you do now? Obviously, move to the next country holding the next party!

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