Stock, Bond Slumps Signal Worse Than '94 in Return to Inflation Era of '74

[marmar]

from Bloomberg:



Stock, Bond Slumps Signal Worse Than '94 on Inflation (Update1)

By Michael Patterson

June 30 (Bloomberg) -- It's been 14 years since investors suffered as big a retreat in stocks and bonds and some of the largest money managers say the losses may have more in common with the 1974 bear market before the worst is over.

The Standard & Poor's 500 Index dropped 3.4 percent since March and investors in Treasuries lost 2.88 percent, the steepest combined plunge in 14 years, according to data compiled by Merrill Lynch & Co. and Bloomberg. Equity and debt markets fell in tandem for only the sixth time since the savings and loan crisis of the 1990s as oil closed at a record 19 times and concern grew that inflation will cut the value of bond payments.

Dreman Value Management LLC, BlackRock Inc. and Cambiar Investors LLC, which together oversee $1.38 trillion, are buying banks, phone companies and oil producers to weather more declines in benchmark indexes. David Dreman, whose DWS Dreman Small Cap Value Fund beat 90 percent of its peers over five years, bought Cleveland-based KeyCorp as financial firms fell to a 10-year low last week. BlackRock added AT&T Inc. for the best dividend yield since 2006. Cambiar says Marathon Oil Corp. is inexpensive.

``Between inflation and the liquidity crisis, this is one of the toughest markets I've seen,'' said Dreman, who oversees about $15 billion in Jersey City, New Jersey. ``But it's not a market you sell into. Any losses you take by being too early will be more than offset by buying cheaply.''

Coordinated Plunge

Dreman founded his firm in 1977, three years after the S&P 500 fell 30 percent for its worst annual loss in the last 60 years. Stocks plunged as the Arab oil embargo pushed up U.S. consumer prices as much as 12.3 percent, at the time the biggest annual advance since 1947.

Consumer prices climbed 4.2 percent in the 12 months to May. The Reuters/Jefferies CRB Index, a gauge of 19 commodities, added 49 percent in the past year, exceeding the record 48 percent annual gain in 1973. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aLyjKy00BA1A&refer=home

[Atman]

1. The Obama campaign MUST get out ahead of this story or else

Or else the next round of Carter-esque inflation and oil crises is going to be squarely placed on the shoulders of the Democrats. Count on it. BushCo is stalling EVERYTHING just long enough to make sure the shitstorm hits full force under a Democratic administration. And of course, the media is aiding and abetting.

Obama should be talking about this NOW. Prepare America -- i.e.: "We're being set up. Things WILL be bad, but they'll be bad because of what Bush has done. You gave Bush eight years to destroy the country, please give me at a least a few to try to get it back on track before anyone starts buying into the coming Republican talking points."

Hey, I can dream can't I?

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