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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: MulhollandDrive who wrote (3892)	12/26/2003 2:42:48 PM
From: Douglas M. Benedict	Read Replies (1) of 110194

This is actually a great chart...but looks flawed, in that it is trying to fit the K-Wave to some presupposed 54 year cycle and using the Stock indices as a reflection of economic activity...If I recall properly, Kondratieff was concerned with commodity prices...(rising prices of materials shift wealth from consumer to supplier; ergo: from the many to the few...and vice versa when material prices decline) financialsense.com If you look instead at the PPI/CRB you will notice that the cycle accelerated to 10 up yrs. followed by 20 down yrs., on the last "3" cycles starting in 1896 (20 up/20 down)...(there is 1 extra summer between 1908 and 1966...why this is not obvious, I cannot tell...but it happens between 1940 spring and 1948 summer, maybe the low interest rate policy during the war effort...)...once you factor in a third cycle between Spring of 1940, summer 1948, and autumn of 1960 up to the spring of 1970 accounting for the bull market of the 60's...the relationship of rising stock indices makes sense during the autumn periods when rising commodity prices are check-mated after a prolonged interest rate hike...ie: the high carrying cost of commodities forces dumping rather than inventory replacement...thus the bull of the 90's The stock indices upward movements reflect the profit margin improvements during the down/flat "INPUTS" cost periods (20 yrs)...while the flat/declining indices reflect the higher "INPUT-PPI" costs (10 yrs)... Looked at it this way, IF "INPUT costs" to the Chinese producers increase...one can expect poor profit margins and flat/declining indices until such time as higher costs can be passed onto the consumer and accepted... We may be into the start of a 10 year period of rising "INPUT" costs...in fact, this might be similar to the 1940-1948 period where the PPI/CRB rise preceded the interest rate hikes due to policy interventions (ie: war)... An accelerated K-Cycle makes more sense to me, given "global" demographics and the acceleration of technological advances this century... Anyways...just my 2 cents worth...(as I can't believe the K-Wave is etched in stone at 54 years, where speed has become the 4th dimension...) I just wanted to post this..so I can refer back to it...when someone says "Eureka"... I'm open to countervailing and supported opinions... May the commodity boom of the SPRING K-Wave reign ;) (The coming summer would be marked by rising interest rates) Doug Benedict

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