RE: Rate Cuts :Careful what you wish forLets consider the other side of your comments:
1. Economy grinding to a halt: You need two consecutive quarters of negative growth to decalre a recession. So, by March the statistical numbers will not be available to support a conclusion of a recession.
2. Hard landing? Growth of 2% to 2.5% is hardly a hard landing.
3. Consumer debt at all time high: Yes it is at an all time high, when has it not been at an all time high over the past twenty years? The reason it is always at its highest: A. Prices are higher, i.e., 30 years ago a house cost less, now it is more, so the mortgage is larger. B. Baby boomers spend more, and hence borrow more, and there are more baby boomers in that position today then ever before, i.e., 20 years ago, 10 people borrow $ 50 k to buy a house, now you have 14 people borrowing $ 100 k to buy homes C. Do you collect air miles points from any credit card? How many monthly payments are billed to a credit card instead of a withdrawal from a bank account in order to get the points? ie. long distance charges are on credit card, but credit card is paid off each month, but the amount carried on the credit card is higher - same amount of monies being spent, but just simply billed through the system differently.
4. Japan: They had a decreasing amount of 44 year olds (the important age of baby boomers) at the beginning of the 90's, hence just as our markets rise due to baby boomers, theirs declined as a result of a lact of mid-age individuals. The statistical proof of this is easily visible by checking any demographic graph for Japan. The next age wave for the Japaness begins mid 2000 and hence you see their market begin to increase. Also, note that in March of this year, the NIKKIE changed the index by including new economy companies and removing old economy stocks - they did this at the height of tech market, so if you use the old yeard stick from this past Janaury, you find that NIKKIE is actually higher by 3,500 points.
5. Cash on the sidelines: Employement remains fairly intact, so income continues to flow in to the household. Hence money is still avaialbe to invest, and since you have more people with more money than ever before, there will be more people, with more money investing - hence you have cash flowing into the market. As the market shrinks, it takes less cah to move it higher.
I am not saying thw world is rosy, but is is not a gloomy as you propose. And just as the demographics indicated a higher market in the late 1990s, this holds true until 2008 - 2010 - unless everyone died in the past few weeks. Since they have not dropped off the planet, I can only assume they are still planning on saving, investing for retirement, and making money.
Markets do not go up forever. NOR DO THEY DECLINE FOREVER. The bottom usually occurs when negativity is highest. Seems pretty high to me.