Bob O'Brien
Head Instructor
bobrien@mywealth.com
With two good reports out yesterday on both housing and consumer confidence, it makes it real hard for me to be bearish in the short term. When it comes to inflation and perhaps hyper-inflation it is just a matter of time, and who isn’t concerned about a double dip recession?
We are going to have economic growth in the final two quarters of 2009, and considering the fact that the world was on the brink of Economic Armageddon just a year ago, there is no way you should not want Ben Bernanke to continue at the helm of the Fed. In fact, I think that if he was not re-nominated the market would have sold off huge.
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(Take a shot!!….Chance to Win a FREE Currency Course Bundle (VALUE: $1300.00!!) by Emailing Us your answer no later than Friday 9AM EST and 3 Names will be randomly picked and named as Winners!! (Must be a blog subscriber) Just as the S&P 500 and the Dow Jones tracks the US Stock market, the US Dollar Index tracks the value of the US Dollar. There are many currencies that make up the US Dollar Index and the Euro is the largest at 57%, which is the second largest? a) CAD Canadian Dollar b) JPY Japanese c) GBP British Pound d) CHF Swiss Franc
Is a double dip recession certain? Considering that fact that we have not officially gotten out of the current recession you could say the question is moot, but things do look good in the short-term considering where we have come from in just a year. If it does become clear there will be a double dipper, stocks will sell-off fast being a leading indicator of the economy.
It will be interesting, and conventional wisdom would say yes there will be a double dip recession. This time last year this would not have been a bad trade off, avoid a depression and a have two recessions. I think policy-makers would have taken that deal in a minute as we all watched storied investment firms drop like flies!
A double dip recession could happen quickly as market forces push up long-term rates on inflation concerns in addition to an already sensitive housing market. Not to mention the coming loss of the $8000.00 home credit, alone could lead to a double dip recession.
Bernanke is the man to watch, and you really have to be careful about saying that inflation concerns will come to a point where he has to raise rates, and that is what will lead to the double dip recession. The Democrats still and will have a super majority in Washington, and tax increases on the wealthy could be used as a form of cold water on an economy that is heating up too fast, as opposed to interest rate hikes.
In addition, Bernanke has proven to be very creative and just assuming that there will be rate hikes to cool off an economy would be presumptuous. It will be interesting, and until then it should also mean continued dollar weakness with higher oil prices,
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