Alan Kral Economy Quotations

The whole last couple of weeks with the economic information that has come out has totally changed people's expectations with regard to the economy going forward.

The big risk with the stocks that have done well recently is that the economy is so strong that it can't continue, and when it slows down, that will hurt earnings. Secondly, when the Fed finally acts to slow the economy and bring down inflation, it will be a double-whammy to earnings - and it will be an extra big whammy to those stocks that have been in the situation where they really need strong earnings growth going forward.

Once we get past the CPI, we'll be right into Fed watch. Just because the numbers report a slower economy doesn't' mean that we're looking at anything more than the natural seasonal response.

I think the Fed is hanging its hopes on a couple of things. The bond price has dropped and yields have gone up and it is doing the job for them. . . the economy as a whole is slightly slower in the second quarter than it was in the first. There's hope that it will tail off to a more sustainable rate.

But the real risk that we have to see with the economy is -- does it take another leg down based upon consumer spending?

Everyone is waiting to see if the Fed does anything, and if it doesn't, what it says about the economy over the rest of the year.