Beyond the Payback
#2
Posted 22 February 2007 - 09:19 PM
#3
Posted 22 February 2007 - 09:19 PM
#4
Posted 23 February 2007 - 10:42 AM
#5
Posted 23 February 2007 - 11:20 AM
Beyond the payback, however, I think the risks lie in the other direction, and both the economy’s resilience and inflation risks may once again resurface. For example, prices for imported consumer goods excluding autos and parts rose by 1.5% in January year/year — the largest annual rise in such prices in a decade. Perhaps the disinflationary impetus from Chinese exports is waning. These crosscurrents in activity and inflation may finally push up volatility in financial markets. From the Fed’s standpoint, that may not be such a bad thing. At a time when low volatility has encouraged risk taking, perhaps to excess, a pickup in volatility might remind investors that higher risk usually accompanies higher returns. And if it simultaneously increased term premiums at the long end of the yield curve, higher volatility would modestly add to financial restraint, perhaps relieving the Fed of some of that inflation anxiety.
I guess the stock market is not a financial market...
- kisa
#6
Posted 23 February 2007 - 01:10 PM