MacroMaven's Stephanie Pomboy: QE3 Is Coming, Short Retail, And Get Ready For More Mortgage Mayhem

MacroMavens' Stephanie Pomboy doesn't believe the recovery is good for the long haul, and she's recommending Treasuries and gold.

When Barron's interviewed Stephanie Pomboy at the end of 2008, she was pretty gloomy about the U.S. economy. That hasn't changed. Contrary to the bullish camp, which expects a strong economic rebound, Pomboy sees no evidence to support a durable recovery. Pomboy is president of MacroMavens, a Manhattan firm she founded in 2002 that specializes in analyzing macroeconomic themes and their investment implications. Her favorite plays include Treasuries -- which, she maintains, will rally once more economic data reveal a tepid recovery at best -- and gold. The 42-year-old analyst views hard assets as a hedge against what she expects will be the dollar's continuing weakness.

Barron's: Let's start with your macro view of the economy.

Pomboy:Not surprisingly, given my skeptical nature, I am dubious about the strength and durability of the recovery. The markets are clearly perceiving that the recovery has moved from, let's say, tentative to solidly durable, and that's been manifesting in various markets since the beginning of the year. But I'm skeptical for a variety of reasons. The stimulus is going away. You have this seasonal-adjustment hurdle that really moves from very low in January to very high in March and April.

Could you elaborate?

The government basically assumes that, every March, retail sales go up, let's say, 12% from the month before. So it makes for a very high threshold. If you get retail sales up only 10%, that number hits the tape as minus 2%. Another challenge is the year-on-year comparisons, which will be tougher as the year progresses. So all of those things conspire to present weaker data in the months to come, to say nothing of how we've now got these twin drags again of higher interest rates and higher commodity prices. So you have fundamental drags on the consumer at a time when employment and wage growth aren't really there to provide offsets. (more)