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Bezogen auf meine Aussagen bzw. Bedenken in Posting # 2109 sehen die Strategen von Comstock ebenfalls weiterhin das Risiko einer harten Landung der US – Wirtschaft. Die Indikatoren, welche in der Vergangenheit den wirtschaftlichen Abschwung anzeigten bzw. vorausgingen, lassen sich nun einmal nicht verleugnen. Die zukünftige Entwicklung wird zeigen, ob es sich hier nur um das Getöse einiger unbelehrbarer Bären handelt oder ob die unten aufgeführten Indikatoren sich letztendlich wiederholt als richtungsweisend herausstellen werden. Why the Risks are High The market is living in a low-probability world that assumes a benign soft landing in the economy, a stimulative second-half Fed rate cut and continued economic strength from the rest of the globe. While possible, we think the odds of this favorable outcome are low. First, if history is any guide a hard landing or recession is highly probable. In the past recessions have occurred under the following circumstances: 1) Whenever GDP growth was below 3% annualized for 5 consecutive quarters. 2) When the Fed tightened monetary policy (8 of the last 10 times). 3) When the yield curve was inverted (6 of the last 7 times). 4) When the Conference Board Leading Indicators were 0.5% or more below a year earlier (9 of the last 10 times). 5) When new building permits were 25% or more below a year earlier (7 of the last 9 times). 6) Whenever payroll employment growth dropped to 1.4% over a year earlier. All of the above has now occurred. On the other hand the consensus of economists has never predicted a recession in advance—NEVER. Although anything can happen in the world of economics and financial markets, we would rather go along with a group of indicators with a high probability of being correct than with a group that has never gotten it right. Second, as for the beneficial effect of Fed rate cuts on the stock market, we have to take the context into account. It’s true that with the exception of the rate cut in January 2001, Fed decisions to ease have almost always resulted in rising markets following the move. However, it is extremely important to note that the upward moves only happened because the market declined significantly prior to the rate cut. In fact, of the ten Fed moves to ease in the last 50 years, the Dow Industrials dropped by an average of 23% prior to the first cut, and declined in every instance. So the chances are that the market will move up after the first rate cut—whenever that occurs—but only after a damaging major decline. The third argument being made is that any softness in the U.S. economy will be largely offset by a strong global outlook. According to Northern Trust Chief Economist Paul Kasriel, this is not likely. He points out that the weakening segments of the U.S. economy—consumer spending, housing and capital expenditures—account for 85% of GDP, compared to exports accounting for 11.5%. In addition domestic demand as a percentage of GDP is declining in the EU, China and Japan, meaning that exports are accounting for most of their growth at the margin. He estimates that U.S. consumer spending accounts for 29% of the rest of the world’s GDP, and is, in essence, their locomotive for growth. It is therefore unlikely that global growth prospects can be split off from the growth outlook in the U.S. In our view, therefore, a hard landing or recession is probable; a Fed rate cut won’t help unless the market declines significantly beforehand; and global economic growth is not likely to provide enough offset. Since this is virtually the exact opposite of what most investors are counting on, we think that the current risks in the market are extremely high. http://www.comstockfunds.com/index.cfm?act=Newsletter.cfm&CFID=18269219&CFTOKEN=59339979&category=Market%20Commentary&newsletterid=1304&menugroup=Home
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