"Investment conclusions? A 3% nominal GDP "new normal"means lower profit growth, permanently higher unemployment, capped consumer spending growth rates and an increasing involvement of the government sector, which substantially changes the character of the American capitalistic model. High risk bonds, commercial real estate, and even lower quality municipal bonds may suffer more than cyclical defaults if not government supported. Stock P/Es will rest at lower historical norms [TD: presumably this does not include the 100x + prevailing P/E ratio], and higher stock prices will ultimately depend on tangible earnings growth in the form of increased dividends, not green shoots hope."
In brief, Zero Hedge will translate what is going on in the world:
The 4th branch of the government (PIMCO) is bearish on stocks -> bullish on Treasuries and MBS -> readers are welcome to browse through PIMCO's inventory of over a trillion in rapidly devaluing U.S. printed pieces of paper and buy as many as possible, as Bill Gross needs to buy an archipelago of islands.
The 5th branch of government (and the first 3 as well, Goldman Sachs, of course) is bullish on stocks -> readers are welcome to browse through Goldman's inventory of hundreds of billions in 100+ P/E completely worthless pieces of paper and buy as many as possible, as Lloyd Blankfein needs to frontrun Bill Gross in purchasing said archipelago of islands.
Full letter for those who need bathroom reading can be found here.