You're watching...
Komal Sri-Kumar, TCW chief global strategist, on his predictions for a dip in GDP and the U.S. economy in the second and third quarters of this year.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Fixing scandal.
-- -- missing here my next guest told -- he expects the US economy to fall into recession either this quarter.
Or by the end of the year because of weakening consumer demands.
And boy Sri Kumar FTC -- chief global -- the chief global strategist there.
You are right on now we've got three consecutive months of declining retail sales number so what does this tell you still less sticking with your forecast for US GDP.
Good afternoon noted yes site I think.
Re I didn't find out how bad would want it to review it did indeed yet I think that second dip in the US economy.
Is going to happen in the second half of this yet.
So I think you're going to start seeing a negative GDP growth number what you did in the third on the fourth quarter the -- we have in other one following.
What other reasons you mentioned got a couple of the minority in -- in the program.
One is of course the three months of the did state is decline in what that this existing -- consumer.
Spending and that's in the future.
I'm consumer spending is more than two thirds of GDP and second as we -- always situation continue to remain intends.
Dot till means that been the economy's growing at something like one and a half percent indeed -- -- -- -- and push it into the negative caught them.
Yeah considering -- danger.
It's totally understandable why people -- spending even if they are fortunate enough to have.
The spare cash they're so much uncertainty out there like I use this workweek too much but if you look at the US political climate an election coming up in this tax and again that where.
Facing at the at beginning of the year plus the situation in Europe and an -- spoken quite a lot.
On the European sovereign debt crisis of all of these things out -- what do you think is weighing most heavily on the US consumer.
And bigger picture the overall economy.
That's a good question noted I think the most important fact that is -- continuing high unemployment rate.
I continued to maintain.
That the employment it's not a lagging indicator that it -- -- -- is an economic site because this dying it's a leading indicator which means.
But unless you give me a job forest.
-- give me a situation with a lot of job security you know addition to giving me a job.
I'm not going to spend big we just want to listen I saw -- a jobs crisis street.
Absolutely I think what we need our structural changes.
We need employment tax credit we need -- nationalization of the tax code.
What we don't need is just unemployment compensation and increasing fiscal spending and one final point.
I QE2 BQE four -- -- -- to achieve anything in terms of employment.
I like to say if you water up not -- and that is what younger I skill level -- I can read -- cannot make -- Internet -- brand -- between it Unita delegation that's what we need just look at the treasury.
-- curve -- we have a new low for the five year yield today -- ten years below clearly below 15 around 145 hit earlier how do you think US bond yields are gonna fall given the global economic.
Situation.
Written below that 220 on that -- -- I was undated talking to 1150 to 175.
Of us might target people who didn't believe -- -- that dot.
Now let me have below 150 an opinion -- I think my next target of one to one and a -- but now.
The -- because the 1452.
Days to does not discount but I US recession.
It still doesn't take into look don't think things falling -- pot -- -- as Europe is concerned.
And if the Middle -- situation is that pension increases.
I think -- would fill more into US dollars because you as dog that is beyond human safe haven.
That means that dog I'd appreciate significantly.
-- interest rates gold dollar and significant.
So -- let me coming here because reading at a time little -- With so much distressed assets out there.
What are what's the best of the worst if you well -- June investing European sovereign debt.
Yet it's too early or their other distressed opportunities that you would recommend.
Good job quite -- -- I think it is too -- to -- the sovereign debt notary I would -- this diamond look like W European companies have a good manager and make the investment for you.
Companies -- unable to get to -- -- that would be one.
Shocking -- -- -- any which way you can if they gain a nice bet that nice investment move.
-- -- I assuming that the investors on nimble enough to developing -- I think -- because they said the interest rates are going Lola.
You're going to be looking at high grade securities -- agreed to create a -- -- big -- even on the on the fixed income side.
-- OK great analysis Sri Kumar thank you so much for joining us.
Good to be on your program go to.
