Weaker Economy May Help Stocks: Jim O'Neill

Discussion in 'Economics' started by S2007S, Jul 21, 2010.

  1. S2007S


    These articles get better and better by the day, this Oneill guy from goldman sachs claims that the weaker economy would "FORCE" the fed to keep easy money policies in place for a lot longer than most anticipate. Whats so funny about this is that the last time rates were this low it led to the crisis we have today, all the easy money policies to get the economy out of the last recessions has led to this credit crisis that in my opinion is NOT going away for a long, long, long time. Cant wait to hear what bernanke has to say today.

    Weaker Economy May Help Stocks: Jim O'Neill
    Published: Wednesday, 21 Jul 2010 | 6:17 AM ET
    Text Size
    By: Antonia Oprita
    Web Producer, CNBC.com

    Weaker economic growth might help stocks because it would force the Federal Reserve to maintain its easy-money stance for longer, Jim O'Neill, head of global economics research at Goldman Sachs, told CNBC Wednesday.

    Getty Images

    Late Tuesday, Goldman Sachs analysts issued a report warning that the gradual withdrawing of fiscal stimulus in the US risks hitting economic growth.

    "I think stuff's cheap" in stock markets, O'Neill said. "So long as growth doesn't disappear, just softening a little, it might help the market."

    Federal Reserve Chairman Ben Bernanke's semi-annual testimony later Wednesday is crucial for where the markets will go, he said.

    "Where the Fed is on monetary policy against the administration struggling on fiscal policy… is probably the biggest issue for the foreign exchange market overall," O'Neill said.

    Based on the latest figures, it can be said that the US economy has lost a bit of momentum, according to O'Neill.

    "To make sure that that's only temporary we need to get a clear sign that the Fed will keep financial conditions as accommodative as possible," he said.

    European stress tests on banks are also important for markets but, in O'Neill's opinion, Spain is the crucial element in the mix.

    "The part of it that's really vital is the Spanish banks. It would have been nicer in my view to have just Spanish tests," he said.

    Emerging markets will play a key role in the next 10 years, said the economist who coined the term BRIC for Brazil, Russia, India and China.

    In the decade ahead, China's gross domestic product will grow by $7.5 trillion, O'Neill predicted.

    "If you look at Brazil and India together and Russia, this decade those three will generate as much growth as the US," he said.
  2. hmmm i think so,,because maybe in weaker economy the price of stock is very cheap,,,:D:D