I just don't think the consumer is going to roll over on the back of a cooling sector. |
I think the next really big number for the market is next Friday's retail sales figures. Up until Friday, investors are going to be focused on oil prices, the earnings, and to an extent, the election. |
If inflation doesn't accelerate much from here, and the Fed just raises rates a little more, we might see something like the end of the 1990s again. But if the Fed has to really ramp up to fight inflation, it's going to be a much worse environment than investors realize. |
If it didn't happen in the first quarter, it's going to have to happen at some point. If consumer spending or investment spending was a lot weaker than expected, it'd be a lot more troublesome. |
If the economy keeps growing at a faster pace, the Fed may need to boost rates for longer than what markets are currently expecting. I think that's what the stock and bond markets are reacting to right now. |
If what we see in these surveys is truly the case, then there will be a clash in the boardroom as these two decide how best to move the company forward. |
In terms of monetary policy right now, most people expect the Fed to tighten during the next two or three meetings, but it's foggy beyond that. Greenspan didn't really say much to clarify, either in his comments or in the question period. He was appropriately non-committal, and so there's been little reaction from stocks. |
Ironically, with all this strength, the net effect of these data on the fourth-quarter GDP number could be flat or possibly even marginally negative. This is because durable goods inventories were flat, which should more or less offset the positive influence of the stronger-than-anticipated December shipments figures. For first quarter GDP, however, these data are unambiguously positive. |
It is a little early to eulogize the housing sector. Look for any deterioration in starts, sales, etc., to be more gradual than the weather-depressed December starts tally would suggest. |
It is definitely clear that (housing) is one area where you will see less growth, |
It is never a happy day for the Fed when GDP is revised down and inflation is revised up. |
It is still far too soon to say how the economy will respond to Katrina, but so far, so good. Things are improving so far about as quickly as could be expected. |
It would represent a bit of a shift from a macroeconomic focus to a banking/regulation focus. |
It's been a tough day overall. |
It's certainly an interesting time as we bump up against levels we haven't seen in quite some time. |