You've mentioned and discounted
inflation risk already, and that would've been one I'd mention with respect to guaranteed savings.
Not exact matches
With the economy
already at full employment and more and more signs of higher wage and unit labor cost
inflation, the
risks are rising that it will be PCE moving up to CPI.
The move is a big gamble on the part of Governor Stephen Poloz, who hopes the rate cut will both spur companies to spend and help fend off low
inflation, but the
risk is that Canada's
already over-indebted households will put themselves in even more danger by taking on excessive leverage.
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.
«Any further stimulus only increases the long - term
risk of
inflation, which we
already view as high.»
For the legs, this can cause chaffing in an area that
already carries a consistently high
risk of that issue without the addition of further
inflation.
Of course, investors would demand an interest premium on newly issued debt to compensate for the expected probability of conversion (and the associated
inflation and depreciation), but they
already do that to compensate for default
risk, which would be much smaller for convertible debt.
But then I am running the
risk that perhaps
inflation has
already taken hold and it's too late to get a good FRM rate.
, however, were more worried about upside
risks to
inflation arising from a labor market that had
already reached full employment and was projected to tighten further.»
«Some other participants, however, were more worried about upside
risks to
inflation arising from a labor market that had
already reached full employment and was projected to tighten further.»
Moreover, because repayment data would come from the Education Department, the
already low
risk of self - serving
inflation by schools would be lessened even further.
«On balance, the
risks to higher
inflation outweigh lower
inflation, but in our estimation, most of the reflationary factors have
already been baked into current interest rates, and
inflation is likely to increase only modestly over the next two years.