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Market Trends
With Gerald Celente
Futurist
Wednesday, May 22, 2002; noon EDT
Gerald Celente, founder and director of The Trends Research
Institute, is a leading trend analyst and a frequent guest on major
media outlets including CNN, CNBC, MSNBC, The New York Times and USA
Today. He is widely known for his ability to provide a unique outlook
on current and world shaping events.
Celente makes predictions on various topics ranging from a rebound in the travel industry to the change in America's mood and pop culture. He also forecasts that once the after shock of 9-11 wears off, Americans will come out of their cocoons "and soak up the pleasures and indulge in the pastimes that can only be experienced in the outside world."
Celente will be online to take your questions Wednesday, May 22
at noon EDT and share his analysis of the trends in the financial
markets and provide a fascinating prospective about the future of the
economy.
Submit
your questions and comments before or during the discussion.
Celente is editor and publisher of The
Trends Journal newsletter, as well as, author of the National Best
Seller Trends 2000 (Warner Books, 1997) and Trend Tracking (Warner,
1990). Celente's new book is titled "What Zizi Gave Honeyboy, A True
Story About Love, Wisdom and the Soul of America".
Editor's Note: Washingtonpost.com moderators retain editorial control
over Live Online discussions and choose the most relevant questions for
guests and hosts; guests and hosts can decline to answer questions.
Gerald Celente: Hello and welcome everyone!!!
Arlington, Va.:
What do you think, a jobless recovery like 1991-92?
Gerald Celente: There wasn't much of a recovery in 91-92. There were job difficulties going through 96, the situation we are in now will be more painful. Particually, cause jobs have been lost in manufacturing that oversees competition and moving of U.S. facilities to other countries. And we don't expect any kind of strong economic rebound at best it will be a slow recovery and GDP growth of 1-2%. We expect the economy to either stagnate or decline and with all the talk about possible terrorist strikes on American soil, if there's one in magnitude of similar impact of 9/11, it could sink the U.S. economy.
Arlington, Va.:
Consumer spending, and home buying, have remained up meaning that there might not be much fuel left in the tank to spur a surge in those sectors. Are we just waiting for the business world to get through their overcapacity/inventory and start spending again? If so, when?
Gerald Celente: A fundamental cause of depression is an imbalance between productive capacity and purchasing power--how much can be produced and how much can be consumed--while sectors will bring down their inventories it's only temporary since there's so much product from a global glut of over producation that's already in the pipeline. From shirts, shoes, cameras -- you name the product there's more of it out there thatn can ever be consumed. There will be much more product that conumer $$$ to purchase them. Also, the consumer is tapped out. For the first time since the government began taking statistics in 1945, household net assets have been decline since 2000. The savings rate is at -1.5 percent. But the consumer will continue to work harder and longer, for the most part, to keep their consumption habit going.
Washington D.C.:
Thank you for taking my question.
What do you think will be the most signficant force guiding changes in this century? What industries will become dominant?
Gerald Celente: How about something as big as the discovery of fire or the invention of the wheel. What will mark the millenium is different from the past, in my opinion, will be a new energy. Not fuel cell, not nuclear power, not solar, not wind, but something much more dramatic. To think that we're burning fossil fuels in the 20th century is a fossil idea. Certainly a country with the brain power to develop an atom bomb through the Manahattan project during WWII has the brain power to create an alternative energy source that is safe, clean, and cheap. We're looking at alternatives in low energy nuclear reactions (lens) or zero-point energy (zpe). Also, scientists have been able to extract significant amounts of hydrogen from common algae. One place to look is infinite-energy.com. We don't know when, where and how it will happen but we're betting it will. The march of progress can't be stopped. We also, think these new energy developments will manifest in self-contained, operationally cost-free, units. When people get off the grid and have their own power source it will truely be revolutionary.
Arlington, Va.:
Do you think that -- at least in the short term -- Wall Street will recovery? When do you see that happening?
Gerald Celente: Before answering this question, that anything having to do with health, physical, emotional, and spiritual will be big business. People over 60 account for one-fifth of the population in richer countries with estimates that it will reach one third by 2050. Simply the older we get the more health problems develop.
There's nothing in the nature of the economy that points to a rebound in the market. Corporate profits will remain low. It must be remembered that the 90's and subsequest boom was a once in a life time event. it began with the fall of the Soviet empire, beginning of globalization, and the Internet technology boom that fueled unprecendented spending and speculation. There will be no .com come-back. What you see is what you get. there will be advances but the only thing that will fuel high stock market growth will be a wild card such as a new energy or nano-technology. We also believe it's a bit of a suckers market where stocks are being pumped up so that insiders have the opportunities to dump out. Agian it goes back to the realities of a global economy and that means global competition capable of challenging anyone in any industry with a better and less expensive product or service. What this means is that margins are paper thin and so are profits
Washington D.C.:
As an investor, where would you put your money right now?
Gerald Celente: We still think that some real estate is a good play. But overall, with continued govn't warnings of future terrorist strikes we're concerned that the already fragile economy can be severly weakened by another terror attack or an anthrax style/biological occurance. We recommend strong positions in cash and in the winter edition of our Trends Journal we recommended buying gold when it was at $275 an ounce. There's global instability. Argentina is on the verge of a revolution, a coup attempt in Venezuala, the Middle East situation is only worsening, Japans new banking laws have created a gold-rush climate among the people, Russia isn't selling heavy quantities, the central banks aren't dumping buillion on the market, the dollar is weakening and inflation in some areas, is starting to pick up. We look at gold as an insurance policy, we're not speculators, it's not our business. But for speculators, our forecast is that if gold hits $325 an ounce and stays there for a few weeks the next stop could be $400. Overall, it's a safe play and unlike etoys and epets even if it goes back to the $275 level you'll be left with something. But more importantly, if the global situation unwinds terribly gold will prove to be the safe haven investment.
Washington D.C.:
Mr. Celente,
Do you think space travel will become a travel destinantion in this lifetime?
Gerald Celente: No. Neither do I think railroads. It's too expensive and if it happens it will only be for the very very rich.
Arlington, Va.:
Forget politics, where do you stand on whether making Bush's tax cuts permanent will help or hurt economy?
Gerald Celente: The problems of the economy are much greater than what tax cuts can achieve in trying to mend it. About politics, I'm a political aethist. I look at the world how it is and not how I want it to be. I don't put values on good/bad. I'm neither an optimist/pessimist. I point this out because the underlying weakness has more to do with the 5 O formula. 1. The first is overcapacity. All around the world there's the ability to produce products and services. 2. Open markets has allowed those products and services to easily flow into the U.S. Because firms must continue selling or risk going broke has been overproduction and because of built up expectations during the era of irrational exuberance, the conditions of overcapacity will not change. 3. Overpopulation. From the beginning of recorded history to 1920 there were 2 billion people on the planet, today there's 6 billion. This has contributed to conditions that have kept prices low and krempt our standard of living. Because the open market permits co.'s to use the global workforce it's difficult to push prices as labor costs fall and since there's an inexhaustable supply of cheap labor these conditions won't change. 4. Overproducation 5. The last o is online b2b efficiencies and money saving online cooperative purchasing alliances made possible by the computer revolution.
So these are the over-riding forces. The tax cut is a drop in the bucket when compared to the realities that are shaping the economic forces of the nation.
Fairfax, Va:
I graduated from College in the late 1980's.
As a single person (as opposed to a household of mulitiple incomes) I have one income.
That income has not been able to keep pace with the cost of living. Rent has been increasing much faster than my salary. After paying rent and making the car payment, there isn't much left.
Is is possible that the American economy now functioning based upon the assumption that there are two or more wage earners in a houshold?
Gerald Celente: It's true the only reason why it shows any stability when you look at federal data is because there are more people working in the household. During the go go 90's, the stock market boom did little to change conditions for the average American. Federal Reserve data shows that the average net worth for 40 percent of U.S. families has declined 36 percent since 1983. And we're getting poorer, in 2000 the net worth of U.S. households fell since the govn't began keeping statistics and it's going to become even more difficult as so many corporations ask employees to contribute a larger share of income toward health care and provide less in terms of retentions and retirement benefits. It should also be noted that working approximately 160 hours more per year than we did 20 years ago. The 5 O formula in a previous answer tells the story of why wages, benefits, and standard of living will continue to decline. Its part and parcel to the global economy. There are benefits of having an abundant supply of high quality inexpensive product but it comes at the loss of high wages and income.
New York, N.Y.:
How long can the residential real estate
boom last, especially in the Northeastern
U.S.?
Gerald Celente: It's hard to tell. I have a gut feeling that like all irrational spikes that it has possibly plateued but being a New Yorker you also know that there are many people who live on the island or close to New York city that have created a boom like climate in the northern suburban and x-urban areas following 9/11. Again with all this terror talk it's conceivable that people will continue to flee north away from Manhattan and the island to find a safer haven. For the rest of the nation we're already starting to see some contractions in new construction. And with no signs of the economy gaining much strength I would again believe that the peak of the real estate market is on the near horizon.
Arlington, Va.:
Gerald, what internet sites do you tap into to find out more about US cultural/pop trends? And did you ever notice how trendy items are going in, and then coming out of style much more quickly? Case in point: South Beach Miami. Do trends now have a shorter lifespan in US due to advent of hip media/life style progamming?
Gerald Celente: It's important to distinguish between trends and fads. Fads are unpredictable, short-lived, and with out political social and economic significance. They may contain 1 or 2 of those elements but rarely all 3. That would make them a trend. Trends are predictable, foreseeable, they have all those 3 attributes. Pop culture is easily identifiable today because it's pretty stagnant and nothing new and exciting is happening. The biggest changes we see in pop culture are in regard to how Europeans and Asians, who once latched on to all things Americans, are now finding much of what we export dull and boring. There will always be areas throughout the country that are hotter and hipper than others. And you can always use the pop culture to guage other areas of entertainment, fashion and night life. Right now there is no "hot-spot America", most of it's cloned. The biggest opportunities lie in identifying and cashing in on new entertainment trends that will lift the mood of the nation rather than the tortured, tattoed and pierced look and style that dominates so many sectors of the industry. For the older generations, 35 and up, a pre- baby boomer night club atmosphere would find huge profit opportunities for an on-trend entrepreneur.
Arlington, Va.:
Just read/listened to the interview with Newt Gingrich on your technology page. Do you share his vision that we'll take nanotechnology for granted in 20 years?
Gerald Celente: His predictions of a lap top for every children in the early IT revolution days are woefully off target. As for nanotechnology it's hard to say. I don't think anybody knows. What often happens with hopeful developments as with genetic engineering do not meet the inflated expectations that surround them before they're developped. They usually fall far short. by the way, this the difference between a futurist and a trend forecaster. Futurist have visions that often surpass reality. Example, flying cars and space colonies. Trend forecasting we look at the events of today and how they affect our lives tomorrow. Nobody can predict the future but you can see the face of it.
Gerald Celente: One of the greatest short comings in America today is the inability of the broadcast media to sufficiently study and understand global issues and events. This is the global age and America isn't an island in the world theater. Beyond the geo-political issues we recommend that people interested in making a buck and staying ahead of the curve to spend more time abroad. Americans are looked upon by many around the world as being narrow minded and thinking that we are number one in everything. We're not. There are many opportunities out there that can be found that are not being utilized or marketed at home. So in this global age and with internet technology so readily available, start using more of it to take advantage of the globalization opportunities that are everywhere.
Gerald Celente:
That wraps up today's show. Thanks to everyone who joined the
discussion.
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