Excerpts from the Barron’s “Roundtable”

Bill Gross, more than anyone, appears to possess a big-picture view with emphasis on unemployment – Richard Russell

Bill Gross – Bill Gross manages the world’s largest bond fund

Bill Gross: The economic problem is one of jobs. Many employment models are semi or permanently broken. This includes state or local hiring, and jobs in construction, auto manufacturing, retailing and Wall Street finance. These were all significant areas of employment in the past.

Gross again — The jobs situation leads to what drives the economic consumption. Without jobs, consumers can’t spend. Remarkably, consumption has stayed above 70% of GDP amid the recession, but consumers can’t continue to spend unless the government continues to write the checks.

It is not only the US economy that has been levered. It is the global economy. When you put the pieces together — the inability to provide jobs in the private sector, and the unsustainable nature of government stimulus — it makes you wonder how long GDP can continue to grow at the 4% rate estimated for the fourth quarter of 2009.

Fred Hickey: I’m worried that the protectionist drums are getting louder here. The US has imposed duties on Chinese steel and tires, and more than 50 anti-dumping actions are in process. China spent $600 billion to build its manufacturing sector. It needs to continue to produce, and it needs an export market. So it is not so willing to give up its competitive advantage.

In the meantime, the US continues to hemorrhage jobs, and increased taxes and regulatory burdens only add to the competitive burdens of US manufacturers. If we continue to lose jobs, we won’t be able to consume, and the rebound we are having right now won’t be maintained. As a result, the Fed will continue to print money. This is a midterm-election years, and there will be a lot of pressure on the Fed to continue to extend the quantitative easing it has engaged in during the past year.

Felix Zulauf: Although printing money doesn’t create a single job.

Hickey: No, but the Fed doesn’t know that.

Mark Faber: He (Bernanke) has been a catastrophe for the US. He wasn’t responsible for the Nasdaq bubble, but he was responsible for the housing and credit bubbles that followed. Anyone who owns natural resources around the world should send him a big thank-you note, however, as a result of the credit bubble, the US over-consumed, shifting wealth, capital spending and employment to emerging markets. And as those markets kept growing, they drove commodity prices higher.

Gross: When you blame central bankers, you don’t go back far enough. The problem really began with globalization — the fall of the Iron Curtain, the incorporation of Asia into the global economy, the development of cheap labor markets since the late 1980s.

In the next five or ten years, there are three problems. One is Social Security, and that is minimal. Health care spending will be more of a problem, and interest on the federal debt compounding at higher levels will be the biggest problem. But it won’t be as much as 30% of GDP.

Gross again: When you include government and private net savings after depreciation, for the first time since the Great Depression, we haven’t even started to come to grips with the conservatism required.

Zulauf: I own a lot of physical gold, but the gold ETF, GLD, is a good instrument for American investors. Gold stocks are a different sort of investment because corporation can go bankrupt. They can be manipulated. They can have bad luck or soaring costs or strikes. At some point, gold stocks will fly, but the safest bet in the gold market is bullion.

…..read the the whole article HERE (trial subscription required)

….read Bill Gross’s I2010 nvestment Outlook HERE.

Richard Russell has made his subscribers fortunes. One of the best values anywhere in the financial world at only a $300 subscription to get his DAILY report for a year. HERE to subscribe. Amongst his achievements Richard was in cash before the 2008/2009 Crash and he has been Bullish Gold since below $300

Ed Note: Richard Russell is bullish Silver and holds one of the largest single positions he has held since the 1950’s in the precious metals.

Ed Note: Some perceptive comments from Richard Russells great daily letter, a letter very valuable to a huge number of subscribers. Note the conclusion below:

“Ah, Mr. Obama, there’s that pesky will of the people again. The people of Massachusetts gave President Obama and his socialistic, government-takeover plans what amounted to a boot-kick to the groin. In a shocking upset, a senate seat in Mass. which had literally been “owned” by the Democrats for half a century went to a relatively unknown Republican named Scott Brown. Clearly, the Democratic majority in both houses are in jeopardy, particularly since many disheartened Dems will now retire. Two underlying reasons were responsible for the shocking Democrat defeat — unemployment and a fierce dislike of the Obama administration’s bungling takeover of everything in sight, with emphasis on the puzzling private health system.”

“When life is a puzzle, I like to go back to fundamentals. The most basic of fundamentals (Dow Theory) is that the market runs from extremes of overvaluation (where I believe it is now) to extremes of undervaluation, a place where it has not been since the early 1980s.

And the question is — are we now on the long winding path to extreme undervaluation? I really think that’s what’s happening now. And I ask myself, how does this help us with positioning ourselves for the coming years?

First, if equities are headed (over time) toward undervaluation, I don’t want to be loaded with common stocks. I’m not a trader so holding stocks, even top-grade blue chips, is not the way I want to go.

As for money instruments (bonds, notes, bills), I think as the dollar sinks over time, interest rates (now abnormally low) will head higher. That leaves out bonds as an investment as far as I’m concerned. Besides, if I hold a bond yielding 4%, and over the next year the dollar drops 5%, I’m out money, and I’m out purchasing power.

So where does that leave me? It leaves me holding as much in the way of precious metals (particularly gold) as I’m comfortable with. So half of all my liquid assets are in gold. But I don’t want to put all my liquid assets in gold, because in investing nothing is guaranteed. The other half of my liquid assets I’m going to leave in dollars, because that will give me time to think, and hopefully, over the next six months to a year the situation will clarify.”

The 85 yr. old writes a market comment daily since the internet age began. In recent years, he began strongly advocated buying gold coins in the late 1990’s below $300. His position before the recent crash was cash and gold. There is little in markets he has not seen. Mr. Russell gained wide recognition via a series of over 30 Dow Theory and technical articles that he wrote for Barron’s during the late-’50s through the ’90s. Russell was the first (in 1960) to recommend gold stocks. He called the top of the 1949-’66 bull market. And almost to the day he called the bottom of the great 1972-’74 bear market, and the beginning of the great bull market which started in December 1974.

1/20/10 Waterford, Ireland – Does the stock market know something we don’t? Yesterday, investors bid up prices on the Dow stocks to a new high. The index rose 115 points.

According to theory, the markets know more than any single investor, analyst or economist. In theory, the markets know everything there is to know. In theory, the markets are always right.

But what the heck? This is the same stock market that signaled clear sailing ahead ten years ago. Soon after, equities hit an iceberg. They sank for the next decade.

Here at The Daily Reckoning, we had our own views. At the beginning of the ’00s, we told readers to sell their stocks. We were right. The stock market was wrong. Heh heh.

So, who ya gonna trust now? The stock market… Or, The Daily Reckoning?

Who knows… Maybe we’re wrong this time, but we see another 10 years of trouble coming. Two years ago, the credit cycle peaked out. After half a century of adding debt, the private sector had had enough. Borrowing turned down. Last November, it registered its 10th month in a row of declines, something that had never happened since they began keeping records after WWII.

Consumer spending has held up surprisingly well. But with credit contracting and unemployment high and rising, it can’t continue.

Small businesses create jobs. But who wants to take the risk of funding a small business now? Not the banks. And the capital markets are closed off to small businesses. You have to have a big business – preferably one that is dying… Then, you can get all the money you want from Wall Street and the…

……read more HERE.

You’ve got to love the “Don’t Worry, Be Happy” crowd on Wall Street. Yesterday they said the stock market was going up on anticipation of a Republican win in Massachusetts. The Republican wins and guess what? Yep, down she goes. I can’t wait to hear the spin on this (trust me, they’ll spin it).

In all seriousness, think about what has taken place in just twelve months. This time last year, it seemed like the Messiah had arrived in Washington. The Democrats looked like they would have their way while the rest (me included) would have to somehow “get along” in this “new era” liberalism/socialism-like environment.

That all evaporated last night when in one of the most liberal/socialists-like states in the nation, they elected a fairly hard-right Republican. All I can say is, “THERE IS A GOD”!!!

This win alone has changed the political landscape and will have a definite impact on markets. I shall, of course, make my views known about it as we progress, but for now I’d like to do a quick update on the markets and some model portfolio and client stocks.

….read more HERE – Peter’s latest on the US Dollar, Precious Metals, Base Metals, Oil and Gas, US Bonds and his latest Model Portfolio Comments 

On Major Moves, Grandich has been very right and not only saved many investors fortunes, but expanded them dramatically. On November 3, 2007 at the MoneyTalks Survival Conference, Peter Grandich of the Grandich Letter warned that “an unprecedented economic tsunami will hit American beginning in 2008”.   Peter advised publicly to short the US market two days from the top in October, 2007 and stayed short until the last week of October, 2008. He began to buy stocks in March 7th,  2009. He also bought oil and oil related investments near the lows after the dive from $147.
….go to visit Peter’s Website.