Here's a good column from Brian Wesbury, Chief Economist at First Trust, and an occasional contributor to The Wall Street Journal. He shares my view on the best response to today's market drop. But there is one big difference in that he, well, actually makes a living in the business and is considered an expert. Here are some highlights.
Never in history has a drop in consumer confidence caused a recession. But that does not mean there won’t be a first time. It could happen in the next few months and we would expect to see some very negative data on economic activity. But this would be followed by an offsetting increase in activity following the psychological slowdown. Productivity is still booming, and so are exports, the Fed is exceedingly accommodative and tax rates have not been hiked. Moreover, oil prices are below $100 per barrel. Finally, all it would take to fix financial market problems today is a temporary suspension of mark-to-market accounting for a targeted set of illiquid assets. In other words, any economic problems that the US faces in the next few months or quarters is temporary. Financial markets have priced in Armageddon, and as a result still present one of the greatest buying opportunities of our lifetimes.
You can read Wesbury's weekly colums and more at FT Portfolios. Hat tip to Dave Mathisen of the Taylor Frigon Advisor for the heads up. I always feel like I'm swearing when I type that.
Recent Comments