[lbo-talk] The Markets and Reality: What, If Anything, Is the Linkage?

Doug Henwood dhenwood at panix.com
Wed Jun 4 12:06:06 PDT 2003


Dwayne Monroe wrote:


>Is it possible for the Dow to look good while the
>countryís economic health is really quite bad?

Not for very long, no. The market is anticipating a recovery in the second half of the year. It's also celebrating Greenspan's strong implication that the Fed is likely to ease further, even if the economy recovers, as a "firebreak" against deflation. He's playing the markets beautifully; talking deflation excites the bond market, while talking ease excites the stock market. If there's no recovery soon, though, the happy times won't last.

Doug



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