Jim, I bought into your Head/Tail concept a long time ago.
Anytime I see the DJIA going up on the back of the industrial cyclicals all sorts of red flags start going up. However, when I see my key financials go up, when the market is down on "interest rate" worries, the facts don't match the picture presented.
Sorry, but I really disagree with you on the future of interest rates. I just have this feeling that I need to take the contrarian position. We really haven't gotten to the real Y2K worry season yet, but have seen the impact when folks choose to wave that red flag.
I'll just take the contrarian approach that I believe that it is not in the interest of the powers that be. Consider first, what percentage of our the federal budget goes to fund the national debt. Second, those "surpluses" that everybody in D.C. is fighting over are built solely on the receipts from capital gains. Since I believe that inflation is simply a monetary issue, the only inflation I see on the horizon is the fed raising interest rates. This action will immediately create an inflationary environment.
That said, if the fed raises rates then I will immediately agree with you (after the July earnings reports), sell everything, short the market, and go on vacation. If they are stupid enough to do this in front of the the Y2K mania that will happen, then they deserve the consequences. For the first time in a long time, they have accomplished their objectives by moving their lips.
Just consider if the CPI report is neutral. The only thing strong in this market is U.S. consumer sales, which IMHO represents the strength of the world, and home sales, no doubt encouraged by the concern of higher interest rates. In fact, where is the smart ad agency feeding on that worry?
A productivity revolution is occurring; it is not imaginary, it is real. Let me provide a simple occupational example. In the past, if I wanted a particular federal tax form I had to call IRS (they paid for the call), and I tried to explain to the person on the other end of the copper wire the nature of the form I needed (IRS paid the salary). They then, hopefully, sent it to me (IRS paid to have it printed and paid for the postage). Now, with a the click of the mouse, it is printing out on my printer. How do we measure this productivity revolution that is occurring throughout our society?
With this, I'll go back to collecting my fundamental analysis, boring data.
JMHO FWIW
Berney |
