In search of the smoking gun
Article Abstract:
US interest rates are not likely to be raised in May 1998 because there is little evidence of inflation for goods and services. Some analysts argue that rates should rise because of asset price inflation. It is not clear, however, that asset price inflation is a problem, since the quality of assets may have improved, in the same way that better quality consumer goods may command higher prices without the price rises being inflationary. An increase in the money supply and in wage inflation could lead to an interest rate rise, and a rise in inflation could lead to a drop in stock prices.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1998
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US economy: the R-word
Article Abstract:
US business cycles have not disappeared, despite structural changes, argues Morgan Stanley's Stephen Roach. Recessions have always been preceded by rises in interest rates, and US interest rates could rise in 1997. This could push economic growth down to under 2% which would leave the economy vulnerable to a shock that could lead to recession in 1998. This means that share prices could suffer. Share prices may in any case be affected by a tighter labor market in 1997 and a profit squeeze.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1997
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It won't sink in until it sinks
Article Abstract:
Stock prices have dropped in Aug 1998, and it is surprising that they have not dropped further. Small investors in the US have a major impact on the market. They have fueled the bull market, so affect whether it will become a bear market. Small US investors are often unaware that interest rate rises tend to adversely affect bonds, and they also expect unrealistically high returns from equity investments. The longer the market takes to drop, the worse the fall may be.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1998
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