Wall Street's recession warning

Article Abstract:

US stock price volatility could mean that US growth will slow sharply. Harvard University's John Campbell has assess 2,000 stocks over the period 1962 to 1997 and has found a link between volatility and growth in gross domestic product. Recessions may reflect a mismatch between demand and supply, which can affects aggregate output due to a rise in frictional unemployment. Wall Street may see increased volatility and this is likely to be specific in terms of stocks, so investors can diversify their holdings to reduce risk levels.

Gross Domestic Product, Forecasts and trends

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World recession no, trouble yes

Article Abstract:

The Russian financial crisis will create serious economic problems in Russia. It could also affect other markets through lower exports, reductions in bank lending and a drop in consumer spending due to drops in stock prices. The extent to which consumption is affected by stock price changes is difficult to assess. Commodity prices are dropping, but this makes consumers of commodities richer. Drops in bond yields will help strengthen consumption. Stock prices may be affected but a slump is not likely.

Russia

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Why cheapness isn't everything

Article Abstract:

Drops in stock prices and bond yields may make equities appear cheap in many Western markets, but there are grounds for caution, since earnings forecasts may be too optimistic. BT Alex Brown's Edmond Warner forecasts a 50-50 possibility of global recession in the 18 months from Sep 1998. Goldman Sachs' Jeffrey Weingarten sees low inflation as likely to help stocks. There is a risk that deflation could replace low inflation, and this would hit stocks, but central banks may be able to reduce interest rates enough to prevent this.

Inflation (Finance), Inflation (Economics)

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