Peter Boockvar Says, We have an “Illusion of Prosperity” – U.S. Economy to Lag Rest of the World

“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. “

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Here We Are Again – We Reached Dow 10,000 in March of 1999

Peter Boockvar, equity strategist at Miller Tabak, points out a lot has changed since the Dow first broke the magical 10,000 barrier in March of 1999.  While most other assets have gained value, the Dow is stuck in the mud.  Worse yet, we’re not even close to break even if you factor in the fact the dollar has lost 25% of its value in the last 10 years, based on the Dollar Index.

Here’s some of Boockvar’s other sobering stats comparing today vs. the first time the Dow cracked 10,000:

  • Total US debt was $24.6T vs $50.8T today.
  • The CRB commodity index was at 192.40. Today, it stands at 269
  • Gold was at $280. Now, it’s hitting all-time highs above $1,060 per ounce.
  • A barrel of crude oil was $16.44, today it cracked $75.