Actually down a tick this month, but looks to me like it’s bottomed, though after getting back to levels not seen since women started entering the labor force.

As previously discussed, looking good for stocks, the euro, wti crude, and not so good for bonds which may have touched cyclical lows in yields.

12 Responses

  1. Warren,

    I know you’ve been positive on stocks for some time and correct in that call. I was wondering if you could shed any light on your general time frame for that outlook? Using what I’ve learned from MMT, actions by the Fed and ECB, if accompanied with further attempts at austerity, are unlikely to improve growth. Corporate profits in the US and Europe appear to be turning negative at the moment, while multiple expansion drives the market higher. As someone with a 3-5 year horizon, the potential for multiple contraction leading to lower prices in that period seems relatively high. Am I missing something?

    As always, you’re work on this site is greatly appreciated!

    1. apart from external shocks the next 3 years or so look good for stocks to me.
      housing looks to be modestly growing via private sector credit expansion as are cars and other consumer credit sales.
      And with the deficit having added several trillion of financial equity over the last few years debt ratios are way down,
      and the deficit still relatively large, so it all looks sustainable to me. And earnings will do just fine with 1-3% gdp growth.

      the potential external shocks are another story, however

  2. @WARREN MOSLER,

    Certainly you don’t think rates move higher here with the federal reserve saying to keep rates near zero till the end of 2014 and are considering another round of qe.

    1. if gdp growth holds at maybe 2.5% and unemployment dips into the 7’s, which could happen over the next few months, more and more fomc members will be thinking we need a ‘normal’ fed funds rate which means a nominal rate maybe 1% over the cpi. And markets will see that coming and discount it in advance.

  3. I think we’re looking at much less Government stimulus than we’ve been having. About a month ago, I thought Obama would try a spending blitz to get UE under 8%. He decided not to do that however, and now, I think they intend to make the headroom they have last until March when a deal will be made on new appropriations and also on a new debt ceiling. See: http://my.firedoglake.com/letsgetitdone/2012/08/04/things-will-get-worse-before-theyll-get-better/#comment-266600

      1. @sdvan, @sdvan, I think it depends on what happens in Europe. To me it seems we still can’t discount the possibility of a political collapse in a Eurozone nation, followed by a withdrawal from the zone, followed by a panic there and flight to bonds here. A lot will depend, however, on our Government responds. Paradoxically, if the big banks are taken into resolution, so that banking here again seems stable, then we may see further flight to the dollar. I wouldn’t bet on it though, since until the game is up over there, the ECB will keep trying to prop up the Euro!

        In short, I’d say see what Warren is doing, and follow his advice. It’ll be right a lot of the time. -:)

  4. Mosler’s Ideaological Nemesis, Rickards, on a jobs program and expanding debts and deficits

    http://www.usnews.com/opinion/blogs/economic-intelligence/2012/08/06/the-internet-and-obamas-stimulusgood-government-spending-and-bad

    Mosler, now is the time to reach out to Rickards and contact your old carribbean sailing friend. Time for you 2 old island pirates to join forces. He is willing for the state to incur debt and deficit and hire many unemployed if we will grow out a natural gas infrastructure in an eisenhower interstate wet dream.

    Life comes down to four or five moments/opportunities Mosler. This is your chance to reach out to rickards, involve yourself with his circles, and the 2 of you start coming out together on shows and articles to educate the public why we need the government to take charge and build the future. Don’t sit on your laurels and wait for him to reach out to you mr. center of the universe 😉

    Look at the economic waves you 2 could conquer together that niether of you can make headway on seperately. Maybe a real chance at changing macro policy from your 2 different spheres of influence. I saw johnny depp unite with the other pirate captains to defeat the evil davy jones, will you sieze your moment?

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