Tuesday, January 16, 2007

Focusing on a little mole?

From Brian Wesbury:
For almost four years, a pessimistic pall has generated forecasts and press reports suggesting that the economy is due for a substantial slowdown, perhaps even a recession. Some of these forecasts finger the "housing bubble," oil prices, or debt loads as the catalyst. But, lately, the number one crutch of the pessimists is an "inverted yield curve" - the fact that short-term interest rates are higher than long-term rates.

On one point, the pessimists are right: the yield curve has inverted before every recession in the past 40 years. But a closer look at past episodes of inversion and recession suggests that today's economy is different. Our models indicate very low odds of a recession and continue to point to strong economic activity throughout 2007.

I think that, since the press continues to give the worry warts plenty of time to share their gloom, it follows that a substantial amount of people will follow (like the sheep in this wonderful film).

Household incomes and assets are growing really well. Corporate profits too. But instead highlighting everything else, the bears like to draw our attention to a little mole. And so, I am short a few of these, happily selling at these levels:

Price for US Economy in Recession at TradeSports.com

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