Thanks for some food for thought. Will go to sleep now, though, and think more tomorrow. (Time screams no, not that thinking thing again from down under the sofa...)
Do you take at all into account in your model geopolitical developments? I think the probability that Iraq/Saudi Arabia will spin out of control has increased considerably in the last few weeks.
ZH- 1.I don't think AG will wan to collapse the US economy again as he did in 99/2000. That was a very close call on near meltdown and must have given him and his geriatric colleagues a bit of a headache. 1987 was bad enough but three times would be too much.
2. The commodity price rises are now cooling off if not in total retreat except for oil os that ought to take off some pressure. The high oil price helps stimulate Russian priduction and that helps balance overall world supply.
3. I don'think that AG wants to put fatehr and son out of the White House and if there is anything resembling 2000/2002 on the market menu for the next couple of months then GWB is going to be out of the White House.
4. There doesn't seem to be very much to prevent the economy from growing more quickly than anyone imagined it would last year. Earnings are continuing to do very well in general and in special cases even better.
5. We have just finished the last week of the first month in the qtr and if I recall it went similarly last qtr. We will soon be hearing interim guidance from industry and I can't recall seeing anything that will rain on that parade in fact the very opposite.
6. The Japanese economy and indeed the whole of Asia is in strong growht mode as opposed to what we saw in the mid 90s or for the last three years. China might slowdown to a bit under 8% at worst if that much. We are just beginning to realise the sheer size of the impact of the Chinese economy.
Zeev, What are you using as a measure for pessimism? To me, VXN looks fairly (not overly) pessimistic but VXO and VIX look like they have a way to go. Please ask your Turnips to teach my Jalapenos a thing or two. Best, Joss
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