Infostream - Datastream Extranet
Infostream - Datastream Extranet
Infostream - Datastream Extranet
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FEATURE<br />
Is the Dow Jones Industrial<br />
Average Index Being Driven by<br />
Irrational Exuberance?<br />
Thomas Aubrey<br />
Director of Investment Management, Thomson Financial<br />
<strong>Infostream</strong> January/February 2007<br />
The Dow Jones Industrial Average index reached an all-time high of 12,342 on 17<br />
November and came close again to breaching this in the first week of December. The<br />
index, which is often used as a bellwether of the US economy, suggests that perhaps the<br />
US economy is in better shape than some other indicators suggest. The inverted yield<br />
curve of the bond market seems to be forecasting a recession, and the US dollar has<br />
depreciated almost 30% against a basket of major currencies since early 2002. The<br />
number of new housing starts has declined nearly 30% year on year, and the University<br />
of Michigan consumer sentiment index has declined in the last two months, as well as<br />
coinciding with a rise in the unemployment rate.<br />
US yield curve comparison year on year<br />
© Thomson Financial Limited 2007 4
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