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Strategies & Market Trends : Galapagos Islands

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To: Jorj X Mckie who wrote (2941)9/27/2002 11:39:54 AM
From: MulhollandDrive  Read Replies (1) of 57110
 
bcaresearch.com

saw this on CFZ...(not sure i understand the chart though)

The Deflation Risk
Fri Sep 27 08:31:00 2002 EDT

Markets are heading for a washout because U.S. and European authorities don’t want to acknowledge the risks of deflation.

The Fed continues to forecast a gradual upturn while leading indicators show that the economy is losing momentum. Moreover, there is no pricing power in the foreseeable future even if the Fed’s forecast of mediocre growth turns out to be accurate. Economic growth needs to accelerate to above-trend in order to reverse current downward pressure on inflation. The model beside forecasts G7 consumer price inflation based on the trend in interest rates and stocks. Markets are warning that inflation could be negative in year. Modern economies can’t handle falling prices because they are built on a foundation of credit, which becomes a major problem when prices fall.
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