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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Earlie who wrote (6564)	5/17/2004 11:53:36 PM
From: mishedlo	Respond to of 116555

Hussman - Stocks are Not Thermometers With the massive U.S. current account deficit hitting fresh lows, there is little room to expand capital inflows from foreigners (a large contributor to past U.S. investment booms). Moreover, corporate balance sheets were improved not by debt reduction, but by swapping to short-term interest rate structures, so there is considerable yield curve risk to balance sheets. This also implies that unlike past experience, it is not at all clear that the next recession will require any sort of inversion in the yield curve – even a flattening could create sufficient strains on the economy. Oil prices have been rising as well, but unlike past spikes in oil, this one is accompanied by a significant spike in long-term futures prices. As the analysts at Bridgewater have noted, this implies that the market sees the increase in oil prices as structural, not just a temporary supply/demand imbalance. Finally, unlike other expansions (outside of the short-lived 1980 experience), indicators such as the ISM figures, new claims for unemployment and so on have been belied by a stubborn lack of improvement in capacity use and help wanted advertising (not even in the trend, which would occur regardless of internet advertising). Great article Read the rest here: hussmanfunds.com