-energy prices are going higher-- both gas and oil. Research the sectors for yourself.
-food prices will be rising because of El Nino..guaranteed
-wages are creeping up. Many have been held dwn because of stock options, but when the mkt starts rolling over, it is only going to get worse.
-commodities have been out of favor for 20 yrs, this tends to constrain supply. Eventually, you get a shortage and prices rise. I think we're seeing the beginnings of this in several commodities.
-Fed is already out this week hinting at a rate hike, but I think theey are too late. The cycle has already started. Too much cheap money floating around.
-Finally, as you so eloquently put it.. rates have been declining for yrs.
Then look for advance indicators. Check a chart of gold. The JSE broke a three yr downtrend last week. Then look at the UTIL, it is rolling over. This is usually a sign of coming inflation. Then check a chart of the banking sector, they peaked when everyone was partying over the CTI/Trav merger. additionally, the bond has ben inching ever closer to 6%. Remember, inflation has historically been around 4%; we're around 2%. A move back to the norm is only 2% but it is a DOUBLING.
-Remember, by the time we know for sure that rates are going up, it is too late. We're sitting on DOW 4000. Also, just for an overall health of the equities mkt indicator, check the AMG data site. Inflows peaked 4 or 5 weeks ago and have been trending down. Money mkt funds are down almost to 0. Then go pull up a chart of the mutual fund cash levels. they're all so afraid not to be fully invested that their cash levels are at 10 YEAR LOWS as PE ratios and equity ownership are hitting records daily! I don't even want to talk about the yield on stocks, which almost doesn't exist anymore.
This mkt appears to be heading for disaster. IMO I even hedged my oil drillers last week, and they are the last US equities I own. good luck.
-Lucretius |
