Jan. 28 (Bloomberg) -- I have structured my investment
themes for 2013 in two ways. The first is geared toward the
current “risk on” climate, even though I doubt it will
endure. The other is a “risk off” scenario that I believe will
unfold once investors recognize the unsustainability of what I
call the Grand Disconnect between robust securities markets and
subdued economic reality.
The investment scene in the U.S. and elsewhere is dominated
by a number of forces: the deleveraging of private economic
sectors and financial institutions; the monetary and fiscal
responses to the resulting slow growth and financial risks;
competitive devaluations; the fixation of investors on monetary
ease that obscures weak real economic activity; and central
bank-engineered low interest rates that have spawned more
distortions and investor zeal for yield, regardless of risk.