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« Musings for June 11, 2007 | Main | Misusing the Most Powerful Computer - Part 2 »

June 12, 2007

Comments

RB

Even more points here, just thought I'd throw it in:
http://dollarcollapse.com/images/charts/lchart15.gif

oldprof

I am delighted to see some of the most insightful readers making such good comments.

Ward seems on target with his interest rate analysis, a confirmation that rates have been artificially depressed for some time. This has implications for the yield curve addicts. Some think that it also affects the Fed Model, but my view is that every day Mr. Market presents a choice.

And Muckdog -- someone who has one of the most objective and level-headed approaches to be found. I always read his work as a reality check -- not to mention the fun.

My own view is a bit different right now, since the recent data are showing a lot more economic strength, but we shall see.

Thanks for adding to the discussion!

Jeff

Ward

The GaveKal guys have a good point that with long term gdp growth of 3% and 2.25-2.5 inflation the long end should be trading around 5.3, and with virtually every country in expansion except Zimbabwe and Lebannon, 120 countries growing greater than 4% real rates have been abnormally low for sometime now.

muckdog

Yeah, but lets think about this...

The recent numbers:

GDP at .6%.
CPI at 2.6%.
Gas prices near highs.
Foreclosures up 90% from 2006.

I just can't see the Fed trigger happy with rate hikes here. That'd push us to the brink of recession, if not just launch us over the cliff.

The only thing that looks inflationary to me is the tight labor market and rising wage pressures. Which most of my friends on the Left tell me is a bunch of hogwash, made up numbers, and lies! (And that the unemployment rate is really closer to 10-12%...yadda yadda yadda).

And you know what they say about charts? They're a great way to predict the past!

The yield curve is no longer inverted, and I know the Fed doesn't control the longer term rates, but I don't see the spread getting too wide here. I dunno...

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