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EconoMeter: Stocks correction unlikely, most panelists say


Sunday, February 13, 2011

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Kelly Cunningham, National University System
Not yet. The stock market does not necessarily reflect the current state of the general economy, which is slowly but gradually improving. The stock market, however, is always forward looking and already adjusting to those expectations. I see commodity prices and inflation rising. Higher business costs will start to dampen companies’ performance. One trading rule is “When CPI inflation is on the rise, stay out of stocks; when CPI inflation is on the decline, buy stocks.” Nevertheless, the stock market has been higher, and I do not foresee anything to suggest a significant drop over “the next few weeks”.