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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (1777)3/11/2004 9:39:45 AM
From: zonder  Read Replies (1) of 116555
 
The US MAY not hike for years. Seriously

I would like to know why you think so. Given the economic growth AND 4% inflation in 2003... How long can they say "But, the CORE inflation is low" and afford not raising rates?

Yes, unemployment is disappointing. But that has to do more with jobs flying away to cheaper lands and immigrants partially picking at the rest, than interest rates.

If we head into a recession before they hike (and I have that as a 75% chance now) they will not hike for years.

Of course they won't hike rates if US goes into recession. Why would you say the likelihood of that outcome is anywhere near 75%?

Except in commodities there really is no inflation

And of course the commodities are raw materials to pretty much all we manufacture. Hence, increase in commodity prices means increased costs (and sooner or later, increased product prices). Why are commodities prices increasing? Would they increase so much and in such a broad manner if economic recession was indeed upon us?

You could very well be right, Mish. None of us can claim absolute and unique knowledge of the future here. All I can say is that the sum total of all I see in various markets does not suggest a high likelihood of an economic recession for the US anytime soon.

Perhaps if the credit bubble blows up in their "can't increase rates because there's danger of deflation" faces -g-
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