- Is a US Recession in the Works?

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Is a US Recession in the Works?

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Is a US Recession in the Works?

Friday, 28 September 2007

By Charles Delvalle
That seems to be the question on everyone’s mind. Well, let’s take a look at what the evidence tells us. And it’s not reassuring.
We have consumer confidence that is quickly dropping. We had a loss of jobs last month, a first in a very long time. On Wednesday, housing inventories hit an 18-year peak. The yield curve was inverted for more than a year. We have a liquidity crisis that is now spreading to the UK. The Fed is dropping interest rates rapidly. And now expectations for a slew of economic reports have been drastically lowered.

And let’s not forget the fact that Christmas spending is projected to basically suck.

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So what do you think? Are we headed for a recession? I would say the writing is on the wall. If we don’t hit a recession sometime next year, I would be very shocked.

The best way to protect yourself in this type of environment is to get into income-bearing companies and give yourself flexibility to play short-term downdrafts.

Source : Investor's Daily Edge

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1. Written by This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , on 03-10-2007 21:09
Consider what leading Japanese firms like Toyota did as the yen strengthened against the dollar. For product lines where they made the highest margins, such as the Lexus, they continued production in Japan. However, for lower-priced models -- where their profit margins were lower and would have been eroded further by the rising yen -- they moved production to the US. They protected their margins on non-premium products by moving production -- and therefore shifting costs -- into dollar-denominated areas,' Singh said.