Winter may be far behind us, but a solid earnings season has driven bears back into hibernation. For the first time since late December, the probability of the American economy stumbling into recession in 2008 has dipped below 50% on the Intrade Prediction Market.
A solid earnings season (ex financials) and numerous predictions that the worst of the credit crunch is over have spurred confidence, and shares of Intrade contracts predicting recession in 08 are trading at $45. The price of the contract, in this case, correlates roughly to the market-assigned probability of the event.
Are we really out of the woods? This writer believes Intrade’s implicit forecast of better times ahead. Henry Blodget thinks it’s nuts. In any event, a number of key economic reports are due this week, as well as an FOMC statement.
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