Here's the link, mate.
Stern warning on Kerry from prophet of profit
June 25, 2004
CHICAGO-BASED Joel Stern heads one of the largest global corporate consultancies, Stern Stewart, and is therefore a recognised expert on the likely behaviour of the world's biggest companies.
He has come to Australia to warn about what might happen in the US next year.
Last October (The Weekend Australian, October 18) he predicted incredibly accurately the huge rise in 2004 US productivity and profits (profits look like achieving a real rise of about 19 per cent); a substantial rise in US employment; and US growth rates of between 4.5 and 5.5 per cent.
His latest predictions are frightening.
Stern says that if John Kerry is elected president ? and he is about six points ahead in the polls ? then corporate America will freeze.
In the second half of 2005 there will be a sharp downturn in economic activity, which will affect the rest of the world. Share markets will suffer a severe blow.
But if Bush is returned, there's a 75 per cent chance the world will have a business boom lasting two or three years, driven partly by the US but also reflecting the strength of Japan, India and China.
Stern believes the China slowdown will be mild, but Europe will remain sluggish, even if Bush wins.
If Kerry wins, the situation in Europe could get very serious with unemployment in Germany and France likely to rise to 12 to 15 per cent ? which could have serious political and social ramifications.
Why is Stern so concerned about John Kerry?
He says that while Kerry hasn't enunciated a detailed policy, his rhetoric so far is directed towards redistributing wealth from the so-called richer groups to the poorer.
That's likely to include a change in dividend and capital gains taxes, a possible rise in marginal tax rates and abandoning the Bush tax cuts that go through to 2009.
He would greatly increase government regulations and promote a much more anti-business environment.
Kerry would make global outsourcing much more difficult, but Stern believes global outsourcing is needed to keep the lid on US inflation and interest rates.
The difference between 30-year bonds and inflation-indexed bonds is now about 3 per cent, which means the market is banking on 3 per cent inflation.
All these moves would create enormous uncertainty among US decision makers, corporations and individuals, who would hold back their hiring and spending, reducing the likely US 2005 growth rate from above 4 per cent to around 3 per cent. The downturn would be concentrated in the second half.
Longer term, the changes Kerry would make to the US Supreme Court would make the American legal system much more interventionist in policy making.
Stern makes no predictions about the election, but he says Bush's campaign will be helped by a US economy which will continue to perform strongly, with a substantial generation of jobs.
Normally that would ensure the re-election of a president but the controversy over Iraq and the fact that Kerry is excellent as a television performer put a Bush victory in doubt.
On the international scene, Stern is particularly optimistic about Japan ? where growth rates above 3 per cent are likely ? and India.
He is also optimistic about ASEAN countries, particularly Thailand.
If Bush is re-elected and Stern is right about US corporate plans, we're looking at a substantial business boom until 2007 which would see stock markets rising strongly and consistently but with higher interest rates.
There is no doubt that if we have a world boom, Australia will be a major beneficiary.
If Kerry wins, and Stern is right about a US slump, then we won't escape the impact.
Stern warning on Kerry from prophet of profit
June 25, 2004
CHICAGO-BASED Joel Stern heads one of the largest global corporate consultancies, Stern Stewart, and is therefore a recognised expert on the likely behaviour of the world's biggest companies.
He has come to Australia to warn about what might happen in the US next year.
Last October (The Weekend Australian, October 18) he predicted incredibly accurately the huge rise in 2004 US productivity and profits (profits look like achieving a real rise of about 19 per cent); a substantial rise in US employment; and US growth rates of between 4.5 and 5.5 per cent.
His latest predictions are frightening.
Stern says that if John Kerry is elected president ? and he is about six points ahead in the polls ? then corporate America will freeze.
In the second half of 2005 there will be a sharp downturn in economic activity, which will affect the rest of the world. Share markets will suffer a severe blow.
But if Bush is returned, there's a 75 per cent chance the world will have a business boom lasting two or three years, driven partly by the US but also reflecting the strength of Japan, India and China.
Stern believes the China slowdown will be mild, but Europe will remain sluggish, even if Bush wins.
If Kerry wins, the situation in Europe could get very serious with unemployment in Germany and France likely to rise to 12 to 15 per cent ? which could have serious political and social ramifications.
Why is Stern so concerned about John Kerry?
He says that while Kerry hasn't enunciated a detailed policy, his rhetoric so far is directed towards redistributing wealth from the so-called richer groups to the poorer.
That's likely to include a change in dividend and capital gains taxes, a possible rise in marginal tax rates and abandoning the Bush tax cuts that go through to 2009.
He would greatly increase government regulations and promote a much more anti-business environment.
Kerry would make global outsourcing much more difficult, but Stern believes global outsourcing is needed to keep the lid on US inflation and interest rates.
The difference between 30-year bonds and inflation-indexed bonds is now about 3 per cent, which means the market is banking on 3 per cent inflation.
All these moves would create enormous uncertainty among US decision makers, corporations and individuals, who would hold back their hiring and spending, reducing the likely US 2005 growth rate from above 4 per cent to around 3 per cent. The downturn would be concentrated in the second half.
Longer term, the changes Kerry would make to the US Supreme Court would make the American legal system much more interventionist in policy making.
Stern makes no predictions about the election, but he says Bush's campaign will be helped by a US economy which will continue to perform strongly, with a substantial generation of jobs.
Normally that would ensure the re-election of a president but the controversy over Iraq and the fact that Kerry is excellent as a television performer put a Bush victory in doubt.
On the international scene, Stern is particularly optimistic about Japan ? where growth rates above 3 per cent are likely ? and India.
He is also optimistic about ASEAN countries, particularly Thailand.
If Bush is re-elected and Stern is right about US corporate plans, we're looking at a substantial business boom until 2007 which would see stock markets rising strongly and consistently but with higher interest rates.
There is no doubt that if we have a world boom, Australia will be a major beneficiary.
If Kerry wins, and Stern is right about a US slump, then we won't escape the impact.
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