Up day on the market - but economy is cooling off

by Darren

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Traders had an up day, but the economy is slowing down, primarily because of the slowdown in residential housing.

The hottest real estate markets have all cooled substantially, and bubble pricing in certain areas has slowed down new investments in the sector.

The boom period in housing was fueled by low interest rates, which are heading back up steadily. As the cost of capital rises, investment in certain sectors lowers. Add to that the uncertain fuel prices and the general high prices of certain raw materials and goods, and it’s clear that fear, uncertainty, and doubt are back in the market in a big way.

One nice thing about the house market slowing down is that when the returns on house investments cools, people will look to the stock market again for higher returns. You might see higher volume, especially as the world is closer than ever to global trading. The upcoming weeks will be very interesting indeed.

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