Currencies
When it comes to currencies, Shilling is betting on the greenback because it’s “the best horse in the glue factory.”
He backs the U.S. dollar especially against the euro, but also against commodity currencies, including the loonie.
“We’re going to continue to see the U.S. dollar strengthen against the loonie,” he said. “I think [the USD] is the safe haven, and [not because] we’re doing anything all that right, it’s just that we’re the best of the bad lot.”
Inconvenient truth for investors
All in all, things are not really cheery and rosy from an investor’s perspective, and Shilling’s message is clear: Brace for deeper bear markets and weaker bull markets.
In his economic worldview, “the U.S. is going to be fine, Europe is in or close to a recession, and there is a big question mark over China’s ability to orchestrate a soft landing.”
His investor themes for the year play it safe and include Treasury bonds and income producing securities.
“I would highlight Treasury bonds [considering] there are still declines in interest rates there, and because Treasuries are the safe haven in the world [of] slow growth,” he said. “I have also selected [such] income producing securities [as] investment grade corporate bonds, municipal bonds—this is for U.S. investors, where it’s a tax issue—and things like matched or limited partnerships, and stocks that pay high, meaningful, rising and secure dividends.”
Also thrown in the mix are utilities, some consumer staples and a few drug companies. Shilling argues that “after the bloodbath in stocks in 2008 many investors, both institutional and individual, say [they] want money now and want it up front. [They] don’t want pie in the sky capital gains.”
