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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Perspective who wrote (3942)4/8/2004 12:38:37 PM
From: Tommaso  Read Replies (1) of 116555
 
I think that the Federal Reserve is trying to make sure that whatever happens, happens gradually and not as a sudden panic and crash. My own guess is that:

1. We see commodities trend on up until

2. manufacturers are forced to pass on costs in higher prices and

3. at the same time the dollar continues its decline, meaning

4. that inflation first in costs and then in wages accelerates, and

5. all these things force up interest rates which begin to include an "inflation premium," which in turn

6. automatically cuts the prices of longer term bonds and

7. pulls money out of the stock market, so that

8. there is a protracted, simultaneous decline of both bond and stock markets, while

9. at the same time numerous bankruptcies and foreclosures force down the housing market, with everything mentioned so far ushering in

10. a long period of economic stagnation in the United States.

So I guess I am expecting boredom, ultimately, rather than crisis.
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