<Why do you think it may break within a month >
Besides the "TrimTabs" type (liquidity) indicators, I just sense we are at the blow-off stage in terms of speculation and sentiment. Plus people are betting on a ghost, a phantom, and they are badly off side in terms of reality (similar to early 2000). The hook is in, Wall Street will distribute a few tens of billions in insider and corporate stock over the next month, the market will hit a brick wall, and break. The train wreck evidence (*) is going to mount up very quickly now (not later).
(*) The train wreck: Inflation in food, energy, and other finished goods, will completely alter consumer spending patterns.
incontext.indiana.edu
Instead of 14% being spent on food, and 3% spent on energy (17%), it is NOW spiking to maybe 19-20% (maybe worse, if there are problems with the SA crop). A 2-3% shift away from the rest of the economy to these non-discretionary items is devastating at this juncture. Additionally intermediate and finished goods inflation is NOW worsening. The American corporate sector will meet the input cost challenge by shedding and transferring (abroad) even more labor. They have control over that, not general input cost inflation. Wages and salaries will weaken, and the one time tax stimulus (transfer) can't be repeated again. Today's "men behind the curtain" monetary policy will be revealed as counterproductive. The train wreck will then be well underway. The focus will shift to how to deal with an overheated world (not just US centric) economy caused by easy money, and running at critical levels in key crude goods. One percent FF is NOT the correct solution, would be like applying leeches to bleed the patient. |
