Inflation has not necessarily increased, if it did, then rates would have to go UP to curb it. Economic conditions, the cost of goods, has gone up and unfortunately is sometimes misconstrued with inflation. If inflation drops or stay modest, then the Fed can drop rates. Remember all the recent rate hikes were to try and curb inflation.
Outside markets, like China, can be a very good indicator of our economic condition. Who is buying all our concrete, steel, and such and actually shipping it abroad ?? Would you pay to ship something if you could make or get it locally. Unfortunately these markets correct also, and their financial system is not always as developed and safeguarded as ours.
I dont necessarily think the market is at a downturn yet, but at a correction. Come on, 700 points since the first of the year without a big blip. The hope is all does not get scared and sell off creating more dips. Buy....buy ... buy !!
My only hope is that the housing market respurs itself. Unfortunately there is usually only two ways. Interest, and repossession. If interest is lowered, people can afford to live in current homes, make more money, and move into larger homes. Second is repossession, where homes are taken in large numbers and resold at a loss thus spuring market. Problem, the banks take the loss and thus must make these losses back up with service fee's, higher interest, chargeoffs, business losses, and other issues which can slow this area. (very high concern to me, as my industry).
Finally war, hurricanes, and natural catastrophes can spur and reduce the economy. First spending is necessary which actually helps the economy. Unfortunately as seen in 9-11 it also creates a syndrome where people shutdown and slowdown. They look for safety by essentially freezing in the moment, and obviously if they are not working, spending, eating, and saving then money is no longer in motion.
My thoughts ... plow thru, keep going. Keep oil in check, keep spending, and lets see DOW at 13500+ at end of '07.
). I get people who call all the time and I can't do anything b/c they were over-stated for income and W2 (seriously if your W2 you prove income plain and simple, only exception would be a waiter or maybe if you have a side business that's mostly cash etc). So between that and Arms adjusting, I get people who are already maxed out and the difference in payment is enough to shoot them over DTI ratios, just had one the other day, 78 DTI. 
