Top forecaster sees U.S. recession

[kliljedahl]

By Joshua Krongold
Bloomberg News

The U.S. bond market's most accurate forecaster, who plies his trade 500 miles from Wall Street, says yields are sending ominous signs about the economy.

While economists at the biggest bond-trading firms wrongly predicted that the benchmark U.S. 10-year Treasury yield would end last year at 5 percent, a University of North Carolina, Chapel Hill, professor came a lot closer to getting it right.

"It was luck, partly," said James F. Smith, 67, who teaches finance at the school. "The other reason is the anticipation that inflation would be contained and that continued rate increases from the Federal Reserve would keep longer-maturity investors enthused about their returns."

Smith turned out to be the top forecaster in Bloomberg's January survey of 66 economists. He predicted the benchmark 10-year yield would end the year at 4.49 percent. At the time, the yield was about 4.27 percent and the median estimate was for it to climb to 5.04 percent by Dec. 31. It finished 2005 at 4.39 percent. Yields move inversely to bond prices.

"Those Wall Street gurus have bigger expense accounts than I have total income," Smith said.



Keith’s Barbeque Central

[onehandle]

1. No shit! 2006 is 1991. Kiss your jobs goodbye! nt

[cliss]

2. You don't have to be a genius to see that

we're headed for a recession. All the signs are there. I put away my crystal ball; no need for it.

Our economy is hollowed-out shell. Our manufacturing base is gone. Our balance of trade is horrific. Probably the worst part is the real estate market. It's showing signs of flattening out.

I've been predicting around February of next year, we're going to see some warning signs. Of course, in Washington they already know it. They just don't want us to know. We're in trouble.

Thx for posting.

[GOPBasher]

3. That's what happens with horrific economic policies. n/t

[AX10]

4. I see it coming in mid 2006.

[Deja Q]

5. D-U-fuckin'-H. You don't need a fuckin' masters degree to see the obvious

offshore and eliminate jobs that prop the economy, guess what happens next?

Somebody fire that fucker now.

[B Calm]

6. My family has been in a recession ever since Chuklenuts first

took the oath during his first term.

[subchicagogal]

7. Love this quote from the article

"Fed Chairman Alan Greenspan said Nov. 3 that the yield curve "used to be one of the most accurate measures we used to have to indicate when a recession was about to occur," though "it's lost its capability of doing so in recent years."

Just like exit polls USED to be able to accurately predict election winners in the US! Hmmmmmm....

[CatholicEdHead]

8. Time for more tax cuts for the rich to turn things around

:sarcasm:

[AX10]

9. Forbes Magazine suggests that more tax 'cuts' are needed.

:puke:

[AX10]

10. KICK

:kick:

[sweetheart]

11. the simple math of a declining hegemon

Lets say you are an american corporation making skin cream. The company's
potential sales are (price of skin cream) (number o persons using cream)
(number of creams used per year per customer). On the charts you show your
investors, the potential is described as your growing sales in europe,
africa, and asia... in short, what market share of 6 billion does the
company hold? As nations distance themselves from US hegemony, they fall off
your company's marketing spreadsheet... suddenly the planet only has 5.8
billion... then india defends its market and 4.6 billion... then china markets
local products leaving 3.6 billion. Indonesia is too risky and parts of africa
too dangerous to deliver-to... so the potential market drops towards 2 billion...
and every act of the bush nutcases further erodes the absolute market potential,
not by undermining any individual product, but rather undermining the basis of
imperial hegemony, that all the world's population is a potential market.

So, as the size of the empire diminishes, so to the potential profit growth
curves, and the corresponding investment in growth.... slowing down to reality
of too much sales and not enough long term thinking.

Wall street will not transcend this problem by repeating its past, by blowing
up big-nationalism and simple bull-market hubris. As the size of the markets
dry up, the size of the profits doo too... the size of the investor's punt
and the market capitalization all move in lockstep......

... down.

[Deja Q]

12. The idea of the investor has been perverted to allow cheating and stealing

Had it remained the realm of the CUSTOMER, we wouldn't see quality and related issues go down just sop the investor can get another $1.60 on his latest stock report.

[sweetheart]

13. business schools have lost the plot

the investor-value model of corporatism has long been overturned as unrealistic given the greater
stakeholder community, including employees, customers and members of the public.

The investor-value model suggests that the ONLY purpose of a corporation is to return you
money from your investment. Business schools "lead" with this wooly assertion and then
proceed to build a pyramid on top of it. And with biblical humour, the bronze statue
has clay feet.