By Angel Abcede
CHICAGO – A combination of unprecedented weather, potential
hostility from Russia and moves by the Federal Reserve to artificially inflate
the value of stocks lead to or are symptomatic of yet another economic bubble
—one likely to burst as dramatically as did the housing and the dot-com booms
of year’s past, according to one economist.
Addressing about 400 attendees at the NACS State of the
Industry (SOI) Summit, Walter Zimmermann, chief technical analyst at United
ICAP, said many signs point to the growing bubble, including a rising trend in
stock prices that resemble the lead-up to other historic bursts, as well as the
sluggish state of tell-tale commodities like copper and gold which in a true
recovery would be doing better.
“It’s probably not time to sell yet,” Zimmermann said. “But
when the bubble bursts, it’s never a slow leak.”
As with walking on thin ice, he advised retailers to get out
when they start seeing signs of sell-offs, such as a move by investors from
high-risk to more secure buys.
Climate change will ultimately affect retailers in the
coming year, Zimmermann said. With many in the room affected adversely by the
extremely cold winter, he said that many of the signs point to a yet another
repeat in 2014 and 2015. He suggested that warming temperatures have affected
the Earth’s jet stream, a current of wind that keeps cold air in the north from
drifting downward. Climate change has allowed that buffer to weaken, setting
colder air down into cities in the Southeast.
Not only did such weather directly affect business by
forcing people to stay home, but it also had an effect on the price of heating
fuels and distillates. These fluctuations forced many of these prices up,
despite what he called the “myth” of energy independence. “Energy independence
does not mean cheap energy,” Zimmermann said, noting how global demand caused
many refiners to export their finished product, and the cold weather only drove
prices for natural gas and electricity higher.
Zimmermann also focused on what he believed to be another
global instability in Russia, and its lead politician, Vladimir Putin. He
referred to Putin as a “thug” and called Russia a “criminal” country. He said
Putin’s actions in the Ukraine have a destabilizing effect on the global
economy and action on the part of other countries is justified. “He should be
told, ‘No.’”
But by far the most destabilizing factor affecting the
economy of the United States, according to Zimmermann, is the Federal Reserve.
Saying that it was created 100 years ago for the benefit of the banking class,
and has showed its colors time and again in its decisions to prop up the banks
back in the late 2000s and its purchase of mortgages held by the banks in the
years that followed. These types of actions, including its purchase of stocks
as a way to fuel lower interest rates, run counter to what’s actually good for
the nation’s economy.
The NACS State of the Industry Summit ends today.