Not only will the US recession will be deeper and longer than expected, but it will last all the wa...
Not only will the US recession will be deeper and longer than expected, but it will last all the way through next year, according to a US hedge fund manager.
David Webb, chief executive and fund manager at Shaker Investments, said he expected to see a significant drop in US GNP in 2002 in real terms, possibly in excess of 2%.
'The stock market typically rallies some three to six months before the end of a recession,' Webb noted. 'In bear markets, the market often rallies in anticipation of an economic recovery. However, if the economy does not recover, the market declines.
'We regard the post-attack rally of late September and early October as most likely representing another bear market rally.'
Webb pointed out the market quarter ending on 30 September this year ranks as the second worst quarter since the inception of the Nasdaq in 1971. He concluded with the gloomy statement: 'We are entering the first worldwide recession since the oil crisis of 1973.'
Hedge fund consultant LJH Global Investments disagrees, however, pointing out that the price changes in the major markets since 10 September are not out of line with average monthly price moves over the last three years. 'It now appears the economic impact will be somewhere in the area of 0.25% of US economic growth for the year,' according to their latest view.
The combined monetary and fiscal policy changes and active interference in exchange markets have kept global sentiment relatively on track. Having said that, LJH points out that most hedge fund managers are taking a cautious short-term approach to their funds.
Shaker Investments, based in Cleveland, Ohio, was founded in 1991 and runs both hedge funds and long-only funds. Shaker has approximately $2bn funds under management.
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