As usual, I don't place too much emphasis on this sort of forecast, but to the extent that I make any comments at all about the outlook for 2006, the bottom line is this: 1) we can't rule out modest potential for stock appreciation, which would require the maintenance or expansion of already high price / peak earnings multiples; 2) we also should recognize an uncomfortably large potential for
market losses, particularly given that the
current bull
market has now outlived the median and
average bull, yet at higher valuations than most bulls have achieved, a flat yield curve with rising
interest rate pressures, an extended period of internal divergence as measured by breadth and other
market action, and complacency at best and excessive bullishness at worst, as measured by various sentiment indicators; 3) there is a moderate but still not compelling risk of an oncoming recession, which would become more of a factor if we observe a substantial widening of credit spreads and weakness in the ISM Purchasing Managers Index in the months ahead, and; 4) there remains substantial potential for U.S. dollar weakness coupled with «unexpectedly» persistent inflation pressures, particularly if we do observe economic weakness.
New
interest rates are calculated based on the borrower's credit history and overall financial health, as well as
current financial
market conditions, rather than the weighted
average of the included loans.
Instead, a new
interest rate offer is calculated based on the borrower's credit history, overall financial health, and
current financial
market conditions — not weighted
averages.