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Moody’s Capital chief economist John Lonski weighs in on the economy recovery, fiscal cliff and the housing market.
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Joining me now job Lonsky chief economist for Moody's capital markets great to have you here and and when we look at these numbers.
You're on -- and we are.
-- that's pretty what fiscal cliff yeah how late -- right now were up by 12% from our twelve month low in terms of a month long average that's pretty good.
Investors are not as frightened as they work.
Some days ago regarding the possibility of higher taxes for capital gains and dividends.
And then those taxes are still in prospect.
All of it is in fact in prospect.
We've we've got the folks introducing bills to just -- -- all thing for a year now.
And the president is making nice he's talking to CEO's seemingly almost every other day.
It's very hard to read this is a market -- we have a kinder and gentler Barack Obama who knows that might prove to be correct.
You know nevertheless -- the matter is that profits have been relatively flat business sales.
Showed no sign of improving significantly I think will be watching what happens this week into the start of the holiday shopping season -- very closely.
And what point do we just acknowledge that we're we're we're -- certain.
You know wobbling along economically.
A bit that the markets are outperforming this economy and in point of fact if we look at it -- right now.
There's a projection here from index of VB in economic indicators.
To just the market's behavior itself the says you know we've got some good things in store here six months washed down the road.
Equities can live with 2% real GDP growth provided that short term interest rates remain close to 0%.
That's something to consider you know we worry about the fiscal weapons efforts to -- my name -- -- 2015.
I mean it precisely and he's he's gonna.
Step up and be willing to purchase treasury bonds in the event that yeah yields move to life and net yield curve is just gonna be so flat it's going to be.
Hard to resist yes so agreed.
We no longer have bond market vigilantes.
Largely because of the superior firepower of the Federal Reserve they don't it is yet.
So I think if the equity market believes that the credit markets -- -- be well -- -- we see a low default rating definitely why not -- equity prices.
-- Housing.
Recovery.
-- -- being shouted from nearly every corner of the country recovery recovery recovery.
Are you satisfied.
Well you don't have to realize he's percentage increases are very impressive how what further off of the very low base -- mean -- -- -- at a level of housing starts.
In the month of October that was something like -- -- -- percent under what -- average from 1993.
Through 1997.
So yes it's good news -- housing and improving but make no mistake about it housing remains a shadow of its former self.
John -- thank you very much for being here thank you.
