Saturday, July 15, 2006


Bonddad On Last Week's Economic News

Short Version: Bad. (As in "Not good".)

The consumer expectations index is very bearish. The ISEE (sentiments) index pulled out of what looked like permanent decline in May-June. I can't get the web page up to see what it looked like last week, but the graph on the main page looks as though it was pretty steady.

Ironically, in March, Japanese stock forecasters were predicting rises no less than 10%, and one brave soul predicted a 70% rise. They were bullish for the first time in a long time. But Asian markets, including Japan, have had perhaps even worse performance than the US market, down very roughly 15% since March, while the S&P (INX) is down only about 7%.

I find this fascinating. The saying was that "When the US sneezes, the rest of the world catches cold. But now we have four major economies (US, EU, and Japan; China if one measures by purchasing power parity) with more in the making. At some point, the rest of the world has to decouple from the US economy. But at the moment, the prospects of global recession are significant.
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