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Strategies & Market Trends : Bonds, Currencies, Commodities and Index Futures

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To: Chip McVickar who wrote (723)	1/9/2001 10:04:23 AM
From: Robert Douglas	Read Replies (1) of 12410

Chip, Why do you think that the coming period, with all its problems, will be one of high interest rates? I believe that one of the byproducts of the recent speculative excess was high U.S. interest rates that spread around the world in order to protect currencies abroad from a rising dollar. There is little justification, IMO, for high rates in most countries. Inflation is unusually low and in many places, like Europe, it is accompanied by high unemployment rates. Even if rates stay too high in the U.S., the recent fall in the dollar gives room for many foreign central banks to lower rates. I think this will begin to happen soon. Myself, I am quite bullish on the outlook of the U.S. and the world. I believe there is a good chance of a recession in the U.S. but this will be a normal reaction from a blowoff in spending by both consumers and businesses. Much of this recent spending was brought about by a stock market bubble and demands a period of below trendline spending to correct it. I don't believe there are any serious structural problems at the root of it.

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