The point is very simple. Business needs to cut inventories because sales are growing too slowly relative to inventories (see above chart; click on the chart to enlarge). The only way to do it is to cut production.
This is one of the reasons I believe business is going to slowdown for some time until the growth of inventories is in line with sales growth.
This environment should be attractive for bonds.
More on http://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio on www.peterdag.com
Since 1977
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