Unemployment, Confidence and Moving Forward
This week's Merrill Lynch Weekly Insights focuses on the many problems facing the economy today. They give their critical insight on the current employment picture, market volatility and how to help position your portfolio for the risks and opportunities ahead.
Lisa Shalett, Chief Investment Officer for Merril Lynch Global Wealth Managemet points out that the factor driving the growing lack of confidence among Americans is primarily unemployment, specifically:
1. Policy Actions based on a rate of unemployment lower than the prevailing trend.
2. Skill set mismatch between jobs available and job seekers. Available jobs have requirements that are above the job seeker.
She does feel strongly that the country will avoid recession. Pointing out that there are companies with a solid portfolio and stable performance. And also that recessions are driven by excess. And that there is not a lot of excess today.
Shalett further adds that two things should be addressed to instill more confidence with the American worker and American Investor:
1. A more realistic policy action on unemployment that is beyond politics to actually address the problem and get into the solution.
2. Entrepreneurship and Innovation. She brings up the IPO of Google and the introduction of the iPhone as prime examples of this. The emergence of Social Networking can again repeat this and transform the economy.
Finally for the investor, Shalett gives the following advice:
1. Tactically rebalance the portfolio. Not once a year but regularly.
2. Exploit that market volatility to focus on growth,
quality, and yield even in the Fixed Income and Real Asset market.
3. Have a more global and dynamic approach.
Although the insight above rings true, it is still hard to shake off the political shadow looming in the country today. Party politics and the corporate agenda are not in sync with the growing US deficit and rising unemployment. Actually, they are both going in opposite directions.
At this point, this is not about being a liberal or a conservative. It's about being an American and becoming united to address the cause.