Dow is showing clear signs of a rounded top
but it might take a few months to come apart
interesting interview of Ed Hyman today
he is one of the very few respected economists
most are merely political apologists commenting on the economy
he had much to say in a short time
mostly positive and encouraging
he expects consumer price inflation to remain tame in 2004
he believes rising commodity prices will be offset by China's low-cost exports to the USA
he believes unless the USDollar falters badly and suddenly, all will be well in our economy
he expects bonds to continue to do well, unless CPI rises
that is really an empty statement
he made no comment on the burgeoning flow of credit
and its minimal payoffs
$7 new dollars of money & credit to produce $1 new GDP now
the historical mean was about 1.4 to 1.5 for decades
this indicates what I call "spinning gears" which eventually creates a climate whereby foreign investors pull out and create a shock wave from a liquidity vacuum, in response to dangerous levels of debt buildup
just like in Argentina
WE ARE DANGEROUSLY INCREASING DEBTS IN THE USA, WORSE THAN IN 2000
although Hyman is respected, and has gotten much right recently,
he somehow gets suckered into the view that rising commodity prices offsets continued poor pricing power
in my book, they screams out PROFIT SQUEEZE
so many pseudo-economists today regard inflation and deflation very incorrectly
monetary inflation does not offset price deflation
they do not cancel out, since they appear and arrive in different places
how do rising copper and natgas prices restore pricing power for office furniture makers who compete with China ???
how do rising soybean and wheat prices restore pricing power for farmers ???
THE ACHILLES HEEL OF US ECONOMISTS IS THEIR ENTIRE CONCEPTION OF INFLATION
they view inflation as some sort of commodity without location
they incorrectly define it
they improperly attribute its causes and effects
rising prices does not constitute inflation
falling prices does not constitute deflation
any more than lying on your lawn in summertime should be attributed to falling off a ladder
I agree with you about an unimpressive stock market recently
the stock market ignored the bond shock in July
I think they now overlook the rising Asian import price threat
can anyone fully explain why WalMart is sluggish here?
I think it is partly a tired consumer and toppy sales
but also the imminent rise in all Chinese import prices
with the JYen up 105 since summer, Asian price inflation is soon to arrive and surprise hapless economist hacks
an interesting sideshow statistic was ignored early this week
import price inflation was +0.4% in October
export price inflation was +0.5% in October
so where is this heralded price advantage for US exporters?
it is nowhere, since their production costs are rising
this has been my central point all summer and autumn:
rising commodity prices, rising energy prices, rising Asian import prices, these will render the declining USDollar advantage as nil to our exporters, even as it further squeezes corporate profits and household budgets
our mfrs are now subjected to rising production costs, which neutralizes the currency exchange advantage
take it easy
I check your stuff once in a while
and thought I would drop by
/ jim |
