September 10, 2012
post contributed by Megan Flynn
In May, the Roundtable was pleased to have one of the most visible Wall Street strategists’ present, Jonathan Golub. Golub, the Chief US Strategist for UBS, provided a historical backdrop of the financial crisis with emphasis put on the key people responsible. He also gave members an update on the current market as well as the overall economy.
The economy is a completely different place than the one we grew up with, Golub said, the world is broken from the events of 2007 – 2008. While the unemployment rate remains high, the jobs picture has improved meaningfully, he said, if you shorten unemployment benefits to 6 months from 2 years, the unemployment rate would go down 1%.
Consumers are buying the store while corporations remain reluctant to spend, and as a result cash balances have risen and balance sheets have deleveraged. After recessions, people deleverage for longer than is expected, Golub said. When there is a huge crash like we had, people keep deleveraging until they can’t deleverage any more. “I think we are going to be continued to be shocked by earnings for 2-3 years,” Golub said, volumes are down and profits are up. The pies aren’t growing so we need to do more and be conscious of cost.