Welcome to the Roaring Tens

01/07/2010 12:00 pm EST

Focus: MARKETS

Jon Markman

Editor, Trader's Advantage

Jon Markman, contributor to MSN Money, says the next decade is bound to be better than the last one, and the US could be a surprising source of strength.

As unpleasant as most of the past decade has been, the new decade is setting up with extraordinary promise and could fulfill many of the aspirations that investors believed would be theirs ten years ago.

If so, the 2010s would turn out much like several other great decades of the past 100 years that also followed years of anguish. The 1920s, for instance, came to be known in the fullness of time as the Roaring Twenties, right?

The next burst of value is not likely to come in the United States and Europe, however, as our supply of talented people has grown faster than our supply of jobs. Wages are going down, the average age is going up, and arable farmland is shrinking.

And [just] when we need smart investment in physical and infrastructure more than ever, our government has decided to spend the nation's rebounding abundance on a cockeyed concept of fairness.

In South America and Asia, in contrast, governments are actively planning for their people's futures more effectively, spending their natural-resource wealth and youthful human capital to build roads, rail lines, state-of-the-art factories, hospitals, and airports that will increase their productivity and competitiveness.

It's easy enough to guess that emerging-market stocks and funds—will continue their late-2000s dominance well into the new decade. And so, too, will gold, which turned out to be the investment of the past decade, starting 2000 at around $300 and exiting at more than $1,100.

If you want to be optimistic about the US over the next decade, consider the remarkable new forecast from ISI Group analysts that we might actually be about to witness the rebirth of manufacturing here.

US labor costs are now more competitive than ever, and the dollar has fallen to a 30-year low in trade-weighted terms. America [may have] at least 11 competitive advantages that could result in stronger exports, restrained imports and more foreign investment. In addition to lowered wages and currency, we boast:

  • Labor market stability

  • An educated labor force

  • Economic and accounting transparency

  • The rule of law

  • Absence of major corruption

  • Deep and liquid capital markets

  • Well-developed (if creaky) infrastructure

  • Favorable shipping costs

  • Targeted tax incentives.

Contrast this positive list with reports of labor violence recently in India and China. No wonder some emerging-market countries are actually putting plants in the United States now.

This is an awesome and unexpected change, much like kids moving in to live with Grandpa and helping happily around the house. Since 2008, emerging-market economies have actually accounted for more US exports than developed economies.

With the assistance of booming emerging markets and a little bit better domestic demand, US manufacturing purchases and employment are well on their way back to above-average growth, after an anemic 2007 and 2008 that nearly put the industrial base of the country on its deathbed.

Click here for the full article.

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