We'll have to see. This market has been surprisingly
resilient, given the valuations and the sentiment.
I think all of this optimism is coming from the
Fed' cheap money policy, even in the face of
7% "growth", if that's real, or 0% inflation, if
that's real. I think both numbers are not real, but
it does not really matter, as long as there is enough
money around to buy stuff like stocks and bonds.
If you look at 10-year rates, you realize that there is
a lot of money sitting in bonds, which can come out
and buy stocks. I don't really know where the money
came from, but evidently someone bought a huge amount of
bonds in the past week or so. Thus, the banks are in
total control - they just don't want the markets to
close above certain levels, so that they don't pay for
the calls they wrote.
Stocks might not go down, until the interest rates bubble
bursts. Then, we'll have a BK of enormous proportions.
On the other hand, they do have a lot of bubbles to manage.
And, the management of some of these bubbles will become
very difficult, should the other bubble start to go
parabolic. For example, if stocks went parabolic here,
people will think "recovery" and dump bonds. Then, the
credit bubble will burst. If you want to keep the bond
bubble in check, you have to say "deflation". Does not mix
well with a 7% growth. Something has to give. I don't envy
PPT now -g- |
