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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: orkrious who wrote (213859)1/11/2003 12:34:44 AM
From: mishedlo  Read Replies (2) of 436258
 
I noticed that too.
But I also think a couple things.
It will take inflows to prop this market up.
If J6P starts tossing in more $ we are going up no matter how insane it seems. But there have been outflows after outflows for the first time in a long time. That is a major trend reversal. That trend reversal is not going to be easy to reverse.

The falling $ makes the US stocks less attractive.
There are forces on the $ that are going to keep it headed south.

The S&P has gone sideways for a month and a half. Increasing volume this month, did not really do much and we are still below last months high.

Finally can that reliquification possibly succeed?
The theory is to inflate away the debt. That is a nice theory, but wouldn't that take higher interest rates to accomplish? Otherwise how are we going to make that debt less problematic? Are company earnings going to be sufficient to pay off that debt under any circumstances? If interest rates rise, borrowing costs rise unless they can all float a godzillion more long term bnonds to suckers on these interest rates, with all this credit risk.

Finally look at jobs. Look at consumer spending. Look at retail sales. Look at homes being sold to ever increasinly hig risk customers. Consider that 68% of the US already has a home. How much more is left of housing (something I keep asking for a year now).

Add it all up and what do you have?
I do not think reinflation has a chance.
But....
When will the market realize that?
Perhaps it does not even have to realize that. Perhaps fund outflows are enough.

Thoughts?

M
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