Tuesday, October 17, 2006

What's up with that? Where are we going?

I listened to a Cramer Podcast, and he said he was surprised at the strength of the market these days. He noted that some company revenue numbers were coming out these days and industrial stocks were doing well!
(Actually, they are doing very well.)

On the other hand we have all heard of the recent housing "soft patch".
(we might even be living it ourselves trying to sell a house) It seems to be more than a simple regional slowdown, but a slowdown in many locations across the country. It is said that housing is one of the great multipliers....that is it has a very long reach into production and services. It is said that as housing goes, so goes the economy.

The stock market has been flirting with new highs. Gasoline prices are falling faster than they went up. Consumer confidence is said to be rising proportional to the falling fuel prices...and I read that people are spending that "saved" money in a sort of "happy yo see the savings" confidence.
(consumer spending does after all account for about 75% of the GDP... so this certainly helps the numbers)

Wow...lots of ups, and downs...all at the same time.

We know that the Federal Reserve has been on a "cap inflation" crusade for years....but there is some indication that the core inflation numbers are up a bit.

According to the article, employment levels are still strong....so what's up with the economy? What will the Federal Reserve do to rates?

The FED is talking about tossing a coin as to whether to raise or lower rates. No clear direction. However, the article did say that they would much rather see the economy slow a bit than to see inflation rear it's ugly head.....so my guess is that at this point the odds shift away from a rate cut, and perhaps a little toward continued slowdown in the economy.

Will the stock market continue to hit new highs? Are people moving money out of Real Estate and into the market? Will they go back if housing hits price bottom?

While it hasn't yet turned into a roller coaster, But then, I don't think the ride has really begun.


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