An Encouraging Economic Analysis

We’ve seen the CRB Index, which is an index made up of 19 different commodities, fall 30%. This is a broad-based index that touches every person on the planet. A 30% reduction in the cost of “daily use” commodities is like a tax rebate check for the entire planet.

2. Oil prices are down near 40% from their highs. This is the equivalent of a global tax cut. Those saved dollars flow right to the bottom line of corporations and consumers alike.

3. Lower commodity prices will translate into beefed up corporate earnings surprises (to the upside).

4. $700 billion in bad bank debt is about to be wiped clean of America’s banking balance sheets. This will allow the banks to re-liquefy, re-leverage and re-loan, which will stimulate economic growth.

5. The credit markets will become unstuck and short-term credit, which is the life blood of all major corporations, will begin to flow again.

6. There is a strong possibility that we will see coordinated global interest rate cuts.

Good news, indeed!