Sloan Sessions: What's up with Wall Street

Allan Sloan

TEXT OF STORY

SCOTT JAGOW: The stock market's on a nasty two-day losing streak, but it's been pretty bullish lately. And it's not just stock prices. Gold, oil, metals -- they're all going gangbusters. People ask me what I make of it. And I say, I don't know, let's ask Newsweek's Allan Sloan.

ALLAN SLOAN: Hey Scott

SCOTT JAGOW: So what else can I tell these people?

ALLAN SLOAN: What you should be telling these people is that the world is getting to be a much more interesting place than it used to be, and they've got to watch it and be patient to figure out what's going on because there's a lot of stuff happening here.

SCOTT JAGOW: And what are those things?

ALLAN SLOAN: Let's see, you've got not only the Dow Industrials knocking on their all-time high, which is a misleading indicator because the Dow is a narrow stock index. You've got gold at multi-year highs, you've got interest rates, long-term and short-term, at multi-year highs, you've got commodities, you've got all sorts of stuff going on, some of which is pulling in different directions.

SCOTT JAGOW: And what could that lead to?

ALLAN SLOAN: If you just looked at the statistics we have, with inflation sort of creeping up, with commodities up, with gold up, with interest rates up. Also I forgot, you know, the gross domestic product is up, corporate profits are up. In theory, you've got an inflationary boom. In reality I'm not really sure because anybody can see now that you're about to have problems with housing which for a long time sort of boosted the economy is now going to be neutral or a drag.

SCOTT JAGOW: Well that phrase inflationary boom is intriguing because you've got boom which sounds good but inflationary doesn't sound so good.

ALLAN SLOAN: But that's what we've got, you know. I'm not even sure this is a boom, OK. Statistically it's a boom. In my stomach, in my gut, it doesn't feel like a boom. And I remember the great inflation of the '70s and this is not like that at all. I mean that's when the consumer price index and all of these things were going up 10 percent a year and interest rates were 15, 16, 18 percent. You often see inflationary booms when stuff gets out of control and there's a demands for this or demand for that, the price goes up. I mean, that's what a boom is. In terms though of jobs and employment, which in 2000 really was a boom, because if you could spell cat, the old joke, with two 't's instead of three, you could walk out of school and get a job, that's not happening now. So the boom is in prices but not really in jobs. It's very confusing in terms of economics. I think I'm glad I don't have a degree in economics because I would be attempting to impose some sort of world view on this and this time I think I'd rather be a journalist and then write about it after the fact. That's going to be a lot easier than predicting it.

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