Monday, March 4, 2013

Latest Hussman

This week:

"From an analytical perspective, it’s striking to me that even some thoughtful economists we know have been making assertions about Fed policy that have no basis in the data. For example, we heard last week that 'The number of times we actually had a bear market on our hands with the Fed easing and the economy expanding by any amount is around zero.' Wow. That’s not even true in the 'active Fed' period. Consider for example March-October 2002, when the market plunged 30% despite reductions in the Federal Funds rate and the discount rate, despite positive GDP growth – two quarters into an economic recovery, and despite a Purchasing Managers Index persistently above 50. Ditto for late-2007 when a bear market had already started, the Fed was already easing and the PMI was still above 50 (despite a recession that wouldn’t be recognized until several quarters later)."

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