Market Bottom Already? I Don't Think So [View article]
Good work, you have done excellent job of explaining the current situation, I also do agree that we are in for more pain, before the situation improves, the kind of debacle the US is going through will take more then few months to work itself through the system, I expect fundamental economic weakness to persist until 2009, the market is already pricing for a rebound by Q3 2008, which I believe is highly unlikely in light of the current economic numbers.
I believe a worthy point to add to your analysis is inflation, as I write this response oil prices are back to their record $109 price level, high energy prices are starting to significantly hurt companies profit margins (Aloca earning last night is a case in point), the continued increase in commodity prices is caused by strong Indian & Chinese demand, meaning a weaker US economy is unlikely to weaken the inflation outlook, which in turn will lead to a period of stagflation, that could prove to be extremely detrimental to the US economy. The FED in my opinion has already given up on its fight for inflation in return for saving the US financial system; while I understand the logic behind their actions, the long term implications of their choice could mean rampant inflation for many years to come.
Market Bottom Already? I Don't Think So [View article]
I believe a worthy point to add to your analysis is inflation, as I write this response oil prices are back to their record $109 price level, high energy prices are starting to significantly hurt companies profit margins (Aloca earning last night is a case in point), the continued increase in commodity prices is caused by strong Indian & Chinese demand, meaning a weaker US economy is unlikely to weaken the inflation outlook, which in turn will lead to a period of stagflation, that could prove to be extremely detrimental to the US economy. The FED in my opinion has already given up on its fight for inflation in return for saving the US financial system; while I understand the logic behind their actions, the long term implications of their choice could mean rampant inflation for many years to come.
Regards,
Nawar Alsaadi