Bond Outlook [by bridport & cie, November 7th 2007]
The oil price is at an all-time high and rising, the USD is dropping by the day, food is more and more expensive, foreclosures are climbing, house prices are dropping, and yet the US stock markets stage a recovery. Do we explain this as wishful thinking on the part of equity investors, or are there genuine reasons why the stock market should apparently deny the risks facing the US economy? We lean toward the former, but must admit that a lower dollar and the prospect of lower interest rates can explain optimism about company earnings. |
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