The speed at which the brakes are coming on in US is shocking - witness the downward revisions today. This is looking like a fast down step to a far lower level of growth.
Yet U.S. stocks are booming and the Dow is within spitting distance of its all-time high - 11,750pts on Jan. 14, 2000.
What a strange place the markets are.
Oct. 2 (Bloomberg) -- The U.S. economy has slowed more dramatically than most economists expected just a few weeks ago, leaving it more vulnerable to a recession.
Forecasters at Goldman Sachs Group Inc. and AllianceBernstein Holding LP in New York have cut their growth estimates for the just-ended third quarter to an annual rate of 2 percent or less. They don't foresee much, if any, improvement in the fourth quarter: Auto-production cuts and slumping home sales are likely to overwhelm any boost the economy gets from lower gasoline prices, they say.
``We're decelerating fairly significantly,'' says Peter Hooper, a former Federal Reserve official who's now chief economist at Deutsche Bank Securities Inc. in New York. He sees annual growth below 2 percent in the second half. The economy expanded at a 2.6 percent rate in the second quarter and 5.6 percent in the first.
``The one-two punch of a slowing housing market and the large announced auto-production cuts by GM, Ford and Chrysler is really going to slow the economy,'' says Mark Vitner, a senior economist at Wachovia Corp in Charlotte, North Carolina. ``It's going to be a bit of a rough landing.''
With few notable exceptions, retailers turned in better-than-expected same-store sales results as consumers shopped for fleece, sweaters and leggings, monthly sales reports showed Thursday.
By a margin of roughly 3-to-1, more retailers outpaced forecasts than missed, reached by analysts reporting to Thomson Financial.
I can't make up my mind on a US recession, data has been conflicting in recent weeks. Consumers are still spending:
http://www.marketwatch.com/News/Sto...43E-4C28-93B6-55964CF3C42F}&siteid=mktw&dist=
At the core of my view [stagflation, then disinflation/selected deflation] is the fact that you cannot hold interest rates real negative, as Fed and ECB did and for as long as they did, without payback. And that payback is inflation. And I mean serious inflation, the sort that dissolves real wealth and that requires v high real rates in order to tame [a la Volcker late 70s]. When I filter through the noise, some of which fits my thesis, some doesnt, I still see this as an inescapable outcome. Higher real rates everywhere and consequences of, colours all my investment decisions.
In the US all that liquidity is still in the system, sloshing around. The hot money is leaving real estate and pushing up the dow IMO. My pharma/health stocks are going nuts all of sudden, wonder why?
The hot money is leaving real estate and pushing up the dow IMO. My pharma/health stocks are going nuts all of sudden, wonder why?
I think you're right, the stock market and large caps in particular are the in-thing now that property is becoming a dirty word.
What a truly horrible time this is for someone wishing to invest, everywhere you turn another bubble is forming.
The US bond market is pricing in a cut in US rates next year as the bursting housing bubble and debt saturation hit the American consumer (I was going to say economy but consumer is more accurate) but the DOW is at at 52 week high? I'll find the link but the correlation between Dow highs and interest rate cuts is interesting. Its happened before in 1981, 1989 could be a precursor?
Well here's that chart any ways. Whatever happens (my bet is a US recession) its goin to happen.
http://bigpicture.typepad.com/comments/2006/10/when_does_the_f.html#comments
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