Five institutional money managers offered different economic predictions in “Reading the Tea Leaves,” a panel discussion Wednesday at the Milken Institute Global Conference in Beverly Hills, Calif.
John Rogers Jr., founder, chairman and CEO of Ariel Investments, said he's “very, very, very bullish” about prospects for a U.S. housing sector recovery, U.S. energy development and a drop in the U.S. unemployment to less than 5%. Mr. Rogers said the U.S. growth rate could recover to more than 4% in the near future.
George Evans, chief investment officer, equities at OppenheimerFunds, was “very, very positive” about growth stocks, especially in emerging markets companies or developed markets companies that provide goods and services to emerging economies. Mr. Evans also anticipated gains over the next five years for information-generation companies, such as mobile telecommunications firms.
In the middle of the spectrum was John Calamos Sr., CEO and global co-chief investment officer of Calamos Investments, who said an increase in interest rates would not be “a bad thing.” The rise would enable banks to start lending to small companies again, fueling job growth, Mr. Calamos said. “A little inflation — 2% to 3%” — would be “a good thing … because the Fed is much better at controlling inflation than it is at controlling deflation,” he added.
Less optimistic was Anne Casscells, co-president, managing director and CIO of absolute-return strategies at Aetos Capital. Ms. Casscells said the global economy is about halfway through a 10-year deleveraging process that will depress U.S. economic growth to about 2% and depress Europe's growth rate to zero annually over the next 10 years. But Ms. Casscells was encouraged that global markets are “coming into a period when individual stock selection will be rewarded.”
The panel's sole arbiter of gloom was J. Todd Morley, founder, chairman and CEO of G2 Investment Group. Mr. Morley avowed that neither the U.S. stock nor bond market levels would be at current levels without stimulus from the Federal Reserve. These are “zombie markets all pumped up on steroids,” Mr. Morley said. However, he did admit to finding good buying opportunities in “hard assets” including iron, copper, gold, natural gas, water and food.