Lee, how can you doubt for one minute that the PPI will NOT be severely doctored? it is very rare to see the market move up so sharply in the last hour of trading on a day that sees a sell-off in both the dollar and bonds and then get a 'bad' government statistic the following day. in any case, i suspect that the market has now completely de-coupled from fundamentals, as is normal in the late stages of an asset bubble. therefore it is quite possible that even a negative PPI results ultimately only in a token sell-off. of course, the bond market is a lot less euphoric and the stock market internals continue to stink - but that does not matter much in the current environment. the market simply 'wants' to go higher. the music will perhaps stop if the Fed gets serious about dampening the speculative fervor, but as i have said before, they are not going to do that for fear of being blamed for a crash. in the 1930's there was a group of congressmen trying to curb the Fed's powers in light of it's role leading up to the '29 crash. they didn't succeed, but institutional memories are elephantine. the Fed will never risk that, plain and simple. in light of this, what could possibly derail the bubble? recently bearishness as measured by put/call ratios and sentiment polls has increased sufficiently to give the current rally some impetus...and if, or rather when, all the major indices break out of the recent trading range to the upside, the long awaited blow-off may finally get going.
regards,
hb |
