Whats the big risk for stocks?
John Rogers: In the early ’80s, when you had extraordinarily high interest rates following high inflation, it was a drag on the market. Higher rates are going to be a real drag on the market next year and may cause the market to be down 10% to 15% in 2006. Mary Lisanti: One of the things I think is different is the secular environment has changed. Interest rates and inflation, I believe, bottomed recently. And that is just as significant as in 1982 when rates and inflation basically topped. The implication of that is huge. We are assuming the Fed is going to be able to control inflation. In post-World War II economies, we have done a lousy job of that. Inflation is sort of like measles. It shows up a little, but then it shows up all over the body. By the time we see it in numbers, it is already here. What I see when I talk to companies, inflation is 3% to 5%. The risk is we push rates up so far that we might tip the economy into recession. Isn’t real estate at risk as well? Brian Roger
