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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Augustus Gloop who wrote (8393)	11/8/2007 3:03:38 PM
From: Hawkmoon	Read Replies (2) of 33421

Augustus.. don't get me wrong.. growth is likely going to slow.. But will it amount to a recession is the question. It would certainly be "noticeable" (as Bernanke states it) for the US to go from 3.9% growth to negative economic contraction (recession). That normally happens when the Fed has reach the end of a span of tightened credit and raised interest rates, right? They choke off growth.. Now.. the Fed is in an easing mode.. right? FF rates are higher than the 10 year bond, right? That gives the Fed substantial room to cut rates something they wouldn't normally have were the economy overheating... (according to their stats).. Furthermore, energy prices increase the cost of production, yet we're showing 4.9% productivity growth... So will we slow? yep... we need to... but will it mean recession?? Not necessarily, IMO.. Btw, the financials make up 18% of the S&P.. so it's understandable they are impacting the overall market.. but the Fed is watching the economy, not the markets. And it's the primary job of the Fed to make sure that banks don't fail. So odds are they will do things on behalf of the banks that they wouldn't consider for an overheated overall economy. Hawk

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