USA JOBS DATA - THE ECONOMY IS RECOVERING, page-13

Youve lost me Grant (is that Grant the oiler, by the way?)

The US have really got themselves in some serious trouble - which is what always happens in a bubble. Many things have gotten right out of kilter. Their dollar is ridiculously overvalued and can only go down. Trade deficits get bigger every quarter and are no longer bolstered by international lending. Household debt is just huge - as far as I know it is way above the Oz level.

Wealth - sure, but it is based on paper wealth and a negative wealth effect is coming into play as the stock market goes down. Its economy has been down for three quarters - but the populace have continued to spend on credit, despite increasing unemployment. Property still looks OK - but property bubbles only last 12-18 months after a stock market top, and in the US, house prices actually go down in a slump, unlike here.

The US market has now lost 100% of the market advance from 1992, in real terms - so investors are no better off and will be worse off later on. Most importantly - sentiment is very low, it's hard to understand here in Oz where everyone is reasonably upbeat.

Having said that:

1. Oz will suffer just as bad as US from a US recession, no matter how currently positive things feel

2. There will be plenty of big stock rallies - we have probably just started one.