So can it get any higher? Or might it just be possible that the propensity to spend start turning down? Perhaps triggered by increased insecurity due to falling house prices?
The other gentleman that debating Schiff on Kudlow & Co. was economist Arthur Laffer. I am unsure as to who is right. The "X" factor that is keeping me in equities this late in the business cycle this time is the issue of to what degree overseas economies, to which much is now exported, keep growing independently of U.S. growth. It's probably just wishful thinking that Japan, China and Europe can keep growing if the U.S. goes into a recession though.
I agree with Schiff on the housing debacle...to a point. I also see a recession, but not a collapse in the dollar. When the USA goes south, so will everyone else. Commodities may go exactly opposite to what Schiff thinks. Also, he says the US will be raising interest rates. If this is done in a positive way vs rest of the world, the dollar isn't going to collapse. Making these long term predicitions is pretty tough.
Forget about further hikes by the FED - that's done for the rest of the year unless Big Ben is trying to start a recession to punish China or some other idiotic concept like that. The housing bubble needs to deflate, not implode. The yield curve does NOT look particularly optimistic for the future. 10 year treasuries have been bid more than I thought they would ever be in this market and suggests that interest rate stability, and perhaps some easing is upcoming. Many economic stats remain weak, and the trade imbalance is not being fixed despite them. Nice and all that to say "don't bet against the consumer" after a fifty year run of positive postwar demographics, but past performance is not a guarantee of future results, yada yada yada... Something has to give. Everyone I know is working harder and harder for no real improvement in their standard of living, and statistics bear this out. Look for yourself. What do your own eyes tell you?
Wow that's a bit what I thought might happen, all the extra exotic mortgages and inflated housing bubble would cause a bigger crash than in the past. What I was looking for were companies going bankrupt since mortgages are also more public than ever but he talked about consumer spending instead. But why would inflation be high? No one is spending.
Well, we will know who's right here soon enough. The past few years the S&P has become increasingly well coordinated with the Nat. Assoc. of Home builders Index NAHB. The S&P lags the NAHB INDEX by 12 months. If the correlation holds going forward we are in for a drop of roughly 200 points in the S&P by December 23rd (+ or minus 2 weeks) and a further drop of about 400 more points by June 2007. Fasten your seat belts! On the bright side oil is likely to come down under $60 within two to four months. On the not so bright side, wages are skyrocketing. The market hates high wages.
this correl is complete bollox, look at it over 10-20 years and if you have any brains, you'll see that you are attemptiong to correl 2 things that have NOTHING to do with each other... another meaningless roubini PoS analysis i guess...