re: ....the Fed, begin to WORRY about inflation...imo within 6 to 12 months.....
Greenspan just said yesterday that he isn't worried about inflation, that he expects consumer spending to hold up, and if it doesn't he will continue aggressively lowering rates. As long as he does that, and as long as inflation stays under 4%, stocks will probably go up, with a lot of shortterm volatility. So, we may get a long bear rally, going to the Fall, or even into early 2002. Once the Fed goes to a tightening bias (= says the risks are toward inflation), then this rally, no matter how high it goes, is going to get choked off, and we go on to new lows. This rally could take the Dow to alltime highs, and the Nas could take out the January high. Lots of good shorting opportunities, as long as an investor gets in somewhere near the top.
For the moment, though, the trend is up, and it's futile to talk about the scary fundamentals, because everyone is expecting a sharp rebound in business conditions (especially capital spending by businesses) in the second half. There is no way to disprove that today, as it is a future event.
Also, there is no solid basis for a rally in gold, until people start to be worried about inflation. I think you'll be right about gold, but you're early. |
