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Burst Bubbles and Political Turmoil Can't Rile Economy
July 10, 2006 (The Ledger)
Although high gas prices, China, and political tension with Iran and North Korea have been prevalent concerns, Brian S. Wesbury says that business investment and the economy's resiliency should allow for continued growth in the second half of the year.
Wesbury, 47, is the chief economist for Illinois-based First Trust Advisors and is a regular contributor to The Wall Street Journal and a frequent co-host on CNBC's "Squawk Box."
"My belief is that commodities and real estate are fully valued or possibly overvalued in some areas. The bond market is overvalued, and interest rates are likely to continue to climb. The stock market as a whole, however, remains 30 percent undervalued. As a result, I would encourage investors to remain invested in equities and, in fact, view that sector as the one with the greatest potential. Within equities, I still believe that the technology area, health care and, believe it or not, manufacturing are some of the areas showing some of the strongest growth and greatest potential."
AntiSpin: We don't believe it. We believe Jim Rogers who thinks Oil will hit well over $100 and stay high, same as he said when we interviewed him May 8. We can't have sustained $100 oil and a robust economy. What we will have is a recession and global stock markets know it. The wild card is what US policy makers can do about it this time since they have already spent deficit spending and tax cut bullets on the last recession and have only the liquidity lever left to pull. In an environment of $100 oil and resulting inflation pressures, already challenging at prices sustained above $70 per barrel, the next liquidity infusion might have unintended consequences more extreme than the housing bubble 2002 - 2005 or the stock market bubble 1996 - 2000.
July 10, 2006 (The Ledger)
Although high gas prices, China, and political tension with Iran and North Korea have been prevalent concerns, Brian S. Wesbury says that business investment and the economy's resiliency should allow for continued growth in the second half of the year.
Wesbury, 47, is the chief economist for Illinois-based First Trust Advisors and is a regular contributor to The Wall Street Journal and a frequent co-host on CNBC's "Squawk Box."
"My belief is that commodities and real estate are fully valued or possibly overvalued in some areas. The bond market is overvalued, and interest rates are likely to continue to climb. The stock market as a whole, however, remains 30 percent undervalued. As a result, I would encourage investors to remain invested in equities and, in fact, view that sector as the one with the greatest potential. Within equities, I still believe that the technology area, health care and, believe it or not, manufacturing are some of the areas showing some of the strongest growth and greatest potential."
AntiSpin: We don't believe it. We believe Jim Rogers who thinks Oil will hit well over $100 and stay high, same as he said when we interviewed him May 8. We can't have sustained $100 oil and a robust economy. What we will have is a recession and global stock markets know it. The wild card is what US policy makers can do about it this time since they have already spent deficit spending and tax cut bullets on the last recession and have only the liquidity lever left to pull. In an environment of $100 oil and resulting inflation pressures, already challenging at prices sustained above $70 per barrel, the next liquidity infusion might have unintended consequences more extreme than the housing bubble 2002 - 2005 or the stock market bubble 1996 - 2000.