... if the DJIA reaches 12,000.
That will be approaching a 15% "correction" from the high point [and the wheels will be squeaking too loudly to ignore].
That marks the point where the DJIA is 4% below the beginning of the year. Right now it is still up 3% for the year and just 8% down from the high, so the Fed will just be watching things.By then, of course, the rest of the country's housing market will look like Michigan's... DOA. New construction will be shut down, foreclosures will be at record levels, and overall economic growth will be less than 2%.
Then even the banking system will recognize that it has more to lose from the stallout than mild inflation. Big Ben will have to stop being "Johnny One Note."Just to jog your memory, here are a few related posts and DJIA:
- June 6 - Economic Medicine [13,465]
- July 19 - What Goes Up.... [14,000]
- August 7 - Bursting Your Bubble [13,504]
It is difficult to get of measure of what the economic big picture is right now. The Christmas season is not over so no real numbers are available for comparison with other years. We know that housing and autos are quite weak. Stable oil prices have been good news as is the Federal Reserve's less aggressive attitude.I think we are getting a measure of what the economic big picture is right now.
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