<<I was thinking just today that there's a chance that the bubble can reinflate with the billions of dollars worth of reserves Greenie's been adding, or duct tape, not sure which.>>
Yep, world's most expensive duct tape!<G>
IF the reinflation experiment is "successful", there will be some easy tells.
1) Wage inflation will skyrocket, ahead of other inflationary indicators (CPI).
2) Areas of marginal shortage during the last bubble (ie, electricity and natural gas) will be at full-fledge crisis shortage levels of supply during peak periods (ie, this summer) (
3) The long and 10 yr yields will continue to rise, which in turn should finally kill the housing bubble once and for all.
4) The dollar will tank, breaking support at 110. Gold will soar, breaking resistence (evidence of the latter today on the XAU, but need confirmation from the HUI and GOX....
The game is for the highest of stakes, and I wouldn't expect the bubble minions to go down without a hell of a fight.
Equities will turn down when it becomes apparent that rates will need to go back up, even though unemployment will still be rising at the time. My guess is we won't see the S&P peak and begin the long trip home untill August or September. This stage of the bear should resemble '73-74 fairly closely with respect to duration, severity, broadness and total washout of bullish conviction. My guess is BubbleBoy will leave the Fed chairmanship no later than 1 year from today as a result of his failed policies. |
