The New Normal? Don't Tell That To Gartman
From the Financial Advisor:

There's cautious, there's bullish and then there's super-bullish. Three panelists at this week's Inside ETFs conference in Hollywood, Fla. offered different forecasts for this year's financial markets.

"There are three ways people see the world," said Brian Wesbury, chief economist with First Trust. "The first is that it's about to end and we're going to fall off a cliff and never come back. The second is that we're in the new normal of a post-apocalyptic world of slow growth. The third view—and this is my view—is that it's not as bad as we think."

Wesbury noted the doom-and-gloom scenarios that naysayers believed could throw the country into recession—the demise of the bond market if the U.S. credit rating was downgraded; the failure of the congressional super committee to forge a deficit reduction deal; and even the impact from the Japanese earthquake and tsunami—came and went without knocking the economy on its keister. Instead, he said, the U.S. economy showed resiliency thanks to personal consumption rates that are at an all-time high.

Nor should people read too much into negative sentiment expressed in the much-touted monthly consumer confidence index readings, which he said has proved to be a poor forecasting tool in the past. For example, he noted, the index was brimming with confidence shortly before the markets went into the abyss during the Great Recession.

If anything, the recent negative sentiment has helped create conditions that bode well for stocks going forward. "One reason to be optimistic about the equity market is because it's cheap," Wesbury said. "I believe 2012 will be a lot better than people think, and I think the first two views [doomsday and the new normal] will be wrong for the third straight year."

But Wesbury's optimism doesn't extend across all asset classes. "I think the U.S. bond market and gold are in huge bubbles," he offered.

Tom McManus, managing director and chief market strategist at Lazard Wealth Management, said that the trends of slower—and lower—economic growth puts him in the new normal camp.

That sober assessment was followed by a blast of optimism from Dennis Gartman, the usually voluble and colorful editor and publisher of The Gartman Letter, a daily commentary on the global capital markets.

"Here in the States, I'm phenomenally bullish," he said, adding that one of the pillars of his optimism is the recent resurgence in the nation's energy production. "In the very near future, the United States is going to be fully self-sufficient in energy," he said, citing new technologies that have boosted oil and gas production in such places as North Dakota, Texas and in the Appalachian Mountains in the Northeast.

"I can't imagine myself being more fundamentally, technically and monetarily bullish about equities than I am at this point," Gartman gushed. That said, his optimism isn't on cruise control.

"My biggest concern about the U.S. is that we'll try to do something to balance the budget," he said. "I understand the need to balance the budget, but I fear they'll do something wrong such as raise taxes.

"Rarely in history has a rising-tax regime created a rising-tax revenue stream," he continued. "It just doesn't happen. When people raise taxes, you get less revenue."

That, of course, is another discussion for another industry conference panel.

Click here for the article at financialadvisormagazine.com.
Posted on Tuesday, January 24, 2012 @ 1:00 PM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.