Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: Wyätt Gwyön who wrote (5998)	5/10/2004 3:50:34 PM
From: mishedlo	Read Replies (1) of 116555

Will the rout be over when the FED moves? ..... . Manufacturing firms of 30 years ago, like General Motors (GM:NYSE - commentary - research), are now in the finance business and the cost of capital is key to their profitability. A rate hike could seriously hurt many of these firms, particularly since they are so heavily leveraged, Saut argued. "The pain of returning to a more normal relationship between interest rates and inflation in a heavily leveraged economy could be a perilous one," he said. Other analysts say a rate hike would reduce consumer spending, which has fueled economic growth over the past few years. Already, there have been signs that consumer spending might be slowing down as oil prices surge, and it could weaken further in the second half of the year when the effects of tax rebates and refinancing wears off. Well, yes, glad someone noticed. But the important rate hikes are happening in the real world, without the Fed. thestreet.com

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