Tuesday, October 27, 2009
Consumer Confidence Declines in the U.S.
Retail holiday sales numbers will be very interesting to watch, will the consumer really keep spending low to match their mood.
55 percent of small business owners rate the economy as poor, up from 53 percent in September and 48 percent in August; 36 percent rate it as fair and only 8 percent say it is excellent or good.For small business owners only 8% say the economy is good or excellent in October, when will this group start to feel the recovery. For more information go to the Small Business Watch survey.
Saturday, October 24, 2009
Based on this analysis we should expect to see inflation in 2012-2013. I would add to these points rents will remain constrained in the near term, putting further downward pressure on CPI.
Kalish provided several reasons to expect inflation risks to be low over the intermediate term of less than five years:
Excess capacity. Kalish says that any of a number of factors point to high levels of excess capacity in the economy right now -- everything from the unemployment rate to industrial capacity utilization rates to commercial real-estate vacancy rates. Those factors put "downward pressure on the inflation rate," he points out.
Cyclical factors. Kalish points out that "following every recession in the postwar period, the inflation rate has fallen."
Slower debt growth. The federal government's total debt may have mushroomed over the last couple of years, but this has been more than counterbalanced by deleveraging in the private sector. "Historically," Kalish points out, "when debt growth has been below trend, the inflation rate has declined."
High real interest rates. Nominal interest rates may be low, but real interest rates (the difference between long-term Treasury yields and the consumer price index) are at abnormally high levels right now, according to Kalish. High real interest rates "tend to discourage the use of debt and, therefore, excess consumption and investment, which puts downward pressure on the inflation rate."
Why inflation could stay low for awhile Mark Hulbert
Friday, October 23, 2009
Gundlach: Dollar Rally Coming
Deflation the Clear and Present Danger
Gundlach: Back Side of the Hurricane Coming
Is he early? Do we have a slight sell off then one last push to 1200-1300 level on the S&P 500 before going back lower.
Wednesday, October 14, 2009
Link 1: Buoyant Market
Link 2: Most Hated Rally in Wall Street History
I take issue with the fact that returning to the pre-Lehman bailout level is a given. Assuming a 20% correction was the natural level for the market, was the market forecasting unemployment going to 9.8%? Is it just me or should the market be below the pre-Lehman level to adjust for the negative impact the Lehman bankruptcy had on the economy. The bigger challenge for investors who see a correction coming is trying to determine what pushes the market back down; until we know what will shift psychology this market countinues higher. At some point the technicals will reverse course and we will learn what level fundamental or value investors are willing to pay for this market. This is not 1982!