1980s Parallels?

Thursday, October 25, 2007 | 01:30 PM

Merrill Lynch's two top strategists, David Rosenberg Richard Bernstein, both concur that the current backdrop is "highly reminiscent of the late-1980s cycle. While no two cycles are ever the same, some very similar patterns have emerged.

A backdrop highly reminiscent of the late 1980s:

• The late 1980s was a cycle characterized by a synchronized global expansion, but in the context of a fatigued US economy and strength back then in Europe and Asia.

• A cycle fueled by tax cuts and highly accommodative monetary policies early on, “new paradigm” views on the equity market bull run, and a massive housing boom that morphed into a bubble and credit excesses that turned into a crunch.

• As was the case this time around, the Fed moved in the latter stages of the cycle to hike rates aggressively and invert the yield curve. As is the case today, practically every reason was cited for why the yield curve didn’t matter any more (nice call).

• Back then, the Asian stock market that caught everyone’s attention was Japan – today it is China.

• We also experienced a wave of LBO-financed merger and acquisition activity that certainly also took hold through most of 2005 and 2006.

• Of course, we also had a faltering dollar in the late 1980s and rising commodity and gold prices igniting concerns over the inflation landscape – concerns that we can now say were overdone.

Interesting observations from the crew at Merrill . . .

>

Source:
1980s Redux?
David A. Rosenberg
Merrill Lynch Economics | 22 October 2007
http://tinyurl.com/2eyell

Thursday, October 25, 2007 | 01:30 PM | Permalink | Comments (40) | TrackBack (1)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

bn-image

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00e54efe4b528833

Listed below are links to weblogs that reference 1980s Parallels?:

» Opening Bell: 10.26.07 from DealBreaker.com
Baidu profit doubles, but shares slip on forecast (Reuters) Ruh-roh. Remember a few weeks ago when the market tanked and everyone said it was because Baidu had been downgraded that day? Didn't make much sense, but let's just play... [Read More]

Tracked on Oct 26, 2007 7:48:14 AM

Comments

You mean the business cycle may actually still be intact? Get outta town!

Posted by: KP | Oct 25, 2007 1:45:25 PM

The comments to this entry are closed.



Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      

Archives

Complete Archives List

Blogroll

Blogroll

Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:


Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites

FeedBurner


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo

Disclaimer

Disclaimer

Odds & Ends

Site by Moxie Design Studios™

FeedBurner