French CaldwellA few short months ago some analysts were suggesting $200 a barrel oil in 2009. What’s worse — $200 or $25 a barrel? If China falls into a major recession $25 a barrel oil could happen: This is a bleak outlook on the commodities markets.
On the other hand, if you’re in an ARM mortgage, with 1- year U.S. treasuries less than 1%, you’re going to get a great reset in 2009. Most people with ARM’s that reset next year could have mortgages close to 3.5%.
But some people can’t wait to get into a conventional mortgage. Hard to believe it, but U.S. mortgages applications more than doubled last week…. Are you getting in line to re-finance?
Of course cheap gas and lower house payments don’t matter much if you don’t have a job – 533,000 U.S. jobs were lost in November – highest in 34 years….
Prediction – by 2009, with falling costs of gas and mortgages consumers who have jobs will actually have more money in their pockets in mid-2009 than they do in late 2008. And goods will be less expensive. But will they be happy enough to spend it? If they are not happy enough, then lack of spending on consumer goods will send China deeper into recession, and then we’re in for a global recession until at least 2010.
Bottom line — With U.S. consumer spending at stake, China, not the U.S., is the inflection point for the recession for 2009.
Comments Off
Category: Uncategorized Tags:
