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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Davy Crockett who wrote (6726)	9/4/2002 8:36:36 PM
From: macavity	Read Replies (3) of 33421

Inflation/Deflation. I know that the CRB is rising but I like to keep things simple. After a bubble you get deflation as there is too much capacity. The credit bubble has financed the equity, now the real estate, and soon the bond bubble. Japan was identical. The money just moves to a new asset class. I think that most of any inflation can be ascribed to the dollar's fall. This may be significant, but as you mentioned deflation is in the longer time-frame in my opinion. Still we have not broken $TNX=3.95 yet (and I would wait for 2 mths under it and a similar break in $TYX). I am surprised how many companies are still being kept alive, esp. telco. All we hear is about keeping credit lines open. This hurts the good companies, by keeping the bad ones alive. Like Japan - the quickest way to end this sort of defaltion (IMO) is to raise rates to kill the weak companies. This has to be true as there is no way that any politico would ever do it. -ranting -macavity

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