|
Mixed signals suggest a continuation of the personalization of the global economic shakeup. Last week, while on a working vacation in Maui, Hawaii, we spent time reflecting and considering the current situation, and came to the conclusion that more than any other recent recession/depression or whatever you call the current economic situation, one thing stands about this period of time. It's more personal and varied than others in the recent past.
For one thing, despite the widespread damage reported, not everyone has been affected in a similar fashion. Aside from the fact that most people have seen some sort of negative as a result of what started as a mortgage crisis, as time has passed, fewer folks have been as affected as others. This suggests that the system has begun to adjust, and that a new order is starting to emerge.
And this makes sense, given the way the Universe works via a three step spectrum, Chaos (normal, non-linear order), Disorder (when things go wrong system wide), and Complexity (the way things start to puth themselves back together). This is based on the tenets of Chaos Theory, which states that the Universe is predictably unpredictable, and that Chaos will eventually fall into Disorder. Complex systems are self correcting, which means that at some point some kind of new non-linear order begins, and Chaos is returned, most likely at at a different level, with a whole new set of parameters to deal with than in its prior incarnation.
Where analysts and normal people get into trouble is in the way they look at life. Most folks are taught, or infer that the Universe, and thus our planet follow some sort of linear order, where A + B = C in some sort of a straight line. In fact, events tend to travel in channels defined by trend lines, much like stock charts. As long as events continue along a particular general direction, as confined by the upper and lower bands or borders, they follow a trend. When events rise or fall above these trend lines, Chaos is no longer in control and Disorder takes over.
When the world is viewed through this prism, it makes a lot more sense than when seen through the more rigid, and error prone view of linearity. So armed with our spectrum as a guide, we noted the following things last week:
- According to The Maui News, the state of Hawaii has lost some $98 million this year from cancelled junkets. Many of these cancelled corporate events have resulted from the U.S. government's clampdown on banks and financial firms that have taken government bailout money.
- As a result, the general atmosphere during our week's stay was subdued. Folks went about their business quietly. There was traffic on the streets of the island, but much less than we've seen on prior visits, especially after dark when it was quite easy to get around. We saw mostly tourists, with the usual surfers and other locals barely registering on the radar screen.
- The hotels and shops were varied in occupancy, with the very upscale places having generally fewer customers than we've noted in prior visits, while the walkways between shops had decent traffic. As the week went on, though, things got a bit more crowded, although nothing compared to what we saw a few years ago in the same places. It was clear, though, that local shops and restaurants, away from the big hotels and the "tourist" areas were doing better, as their prices were about one half of those offered by the hotels. This is a growing trend in all of our recent travels, local shops with good reputations and that offer value seem to be faring better in smaller cities.
- The flights, there and back, were full. But the plane was smaller, suggesting that the airlines have also adjusted. Food choices, and prices at the airport, and on the planes have increased. More interesting was the feeling we got from the friendly and courteous activities of the crews that these folks were thankful to have jobs, and to be flying to Hawaii for a living.
- A significant difference, and clearly a reflection on the global economy, was the decrease in Japanese and German tourists on the island. During previous visits the number of folks from those countries was rather large. Who was there this time? How about Canadians? Tar sands and other natural resources have clearly made a difference in that country's economy and its ability to produce wealth.
- Doctors, and other health care practitioners that were at the conference we attended, mostly from the West Coast, were not complaining about managed care, at least not loud enough for us to hear much. The conference, rather than a big moan and groan session as others that we've attended have recently been, was a quiet affair dealing with science and its application to the daily practice of medicine. This is different than we've seen in Texas, where any gathering of physicians or any health care practitioner always moves toward complaints about managed care.
- People are buying homes on the island. And there is construction. Both seemed steady. And yes, there were a fair amount of spaces for lease, but not enough to suggest any kind of crisis. Prices for gasoline and other items, foods, toiletries, and so on were higher than on the mainland, but nothing too extraordinary.
- At the same time, we were receiving communique's from sources involved in plans for tea parties on April 15th. According to the information we received during the week, there are going to be multiple tea party protests throughout the U.S., involving "thousands" of protestors on April 15th.
Our general impression, thus, was that things have slowed from the previously frantic pace in the island's economy, but not enough to suggest that the economy is going to implode.
What is obvious is that more than ever, there is a huge dichotomy in what people see as primary in their lives, regardless of ideology. At a group dinner, we sat next to a young couple from California. The topic of conversation briefly touched on Bush and Obama. The husband was an alumnus of Occidental College, "Barack Obama's alma mater" as he proudly proclaimed to us. He was convinced that no other president and his cohorts have broken more laws and defaced the constitution than Bush. His wife, on the other hand was worried about the prospects of their six year old son growing up in Los Angeles where, as she described, he "has few friends with any imagination," as "they spend most of their time playing video games."
In fact, the more we looked, the more we saw huge spreads in situations and expectations, which is why we continue to believe that this time, the economy is personal.
According to The New York Times, being middle aged and talented is now a hazard in the job market as "unemployed baby boomers, many of whom believed they were still in the prime of their careers, are confronting the grim reality that they face some of the steepest odds of any job seekers in this dismal market." In fact, "Workers ages 45 and over form a disproportionate share of the hard-luck recession category, the long-term unemployed — those who have been out of work for six months or longer, according to the Bureau of Labor Statistics," and "Even when they finally land jobs, they typically experience a much steeper drop in earnings than their younger counterparts."
This is the kind of situation that changes your life, the way you look at the world, and how you live the rest of your life. And that's why this time around, it's personal.
Conclusion
Where we live, what we do for a living and for leisure, and everything we do affects the way we look at the world. And things economic are at their base, personal. If you fear for your job, or expect to be losing your home, you won't travel or take financial risks of any kind.
Which is why there are still enough people that can travel to Maui and at least keep the island's economy from falling apart altogether. In other words, the economy has clearly taken a hit, but some people are surviving. And some may be thriving, although that may be a stretch at this point.
More important is the fact that difficult times often affect behavior for long periods of time, and are likely to change people's lives altogether, eventually giving shape to long term demographic trends.
From an investment standpoint, we are likely at the very early stages of something being different. You hear about Twitter making a big splash, and Google trying to branch out into different directions. Amazon.com' Kindle portable reader is a behavior changer. And RIMM's Blackberry along with Apple's Ipod and Iphone are also game changers.
But devices are really behavior extenders and modifiers. They are the vehicles through which people move toward the next step in their lives.
Economies are still about people and the way they behave. And what we saw last week in Maui tells us that we are on the verge of something big, a demographic shift of some kind that will define the next investment trend.
It's just a feeling right now, and it's based on observations, not so much hard data. But, as with all other big things, eventually it will take shape and move the markets in a big way. We'll be watching.
Trade the correct trend, every time.
Get Dr. Duarte's All NEW Books "Market Timing For Dummies." and "Trading Futures For Dummies." The Trading Manuals for All Seasons.
|