"I believe there's a good chance of corporate earnings actually declining the second half of this year, contrary to the double-digit growth which Wall Street is still projecting. That's a huge difference...... The Fed is responsible for the worsening situation in Asia, along with the IMF. The high interest rates being pursued by the Fed are totally uncalled for in this environment of minuscule inflation and declining economic activity. As a result, the U.S. dollar is soaring, damaging even further the precarious state of the Asian countries." --Bert Dohmen, The U.S. Economy and the Fed
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Derrick,
That was a good article you posted. Thanks. I too agree that Robert Douglas(fellow SI poster) is very knowledgeable about interest rates and the economy. I am in disagreement about inflation being a concern though. I'm of the belief that the Fed is not going to raise rates at any time in the foreseeable future to fight inflation. It would be too risky considering the corporate earnings slowdown.
Along related lines I found the following excerpt.
Thanks,
MikeM(From Florida)
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"We believe interest rates, not earnings, will be the strength of the bull market over the next year. Both top-down and bottom-up analysts are continually lowering their earnings estimates as companies report weakness (partly due to the Asian affects). We continue to look for flat S&P 500 earnings into 1999. Our bond model, however, continues to suggest yields will continue to decline based on low inflation and the budget surplus. As the budget stays in surplus, there is less need for the government to issue more debt which, of course, limits the supply of bonds and causes yields to continue to decline. This should be the fuel for the stock market's continued rise even with the flatness we anticipate in earnings." --Elaine Garzarelli, CBS Marketwatch.com |
