Joan, Though we can have brief bouts of deflation, our economy is fundamentally inflationary, as we send off dollars for the goods of others. So, I'm not really worried about deflation. I know one thing as an ancient bond traders. The bond prices sure aren't calling for deflation. Despite turmoil in Asia and the non-earnings of our cos., we still see goods inflation. It is not high, especially not compared to the runaway inflation of stocks and real estate, but it hasn't turned negative, either. When is the last time you saw somebody negotiate a salary decrease? <G>
So, my guess is that this financial inflation ends with a bang, not a whimper, and folks who thought they were rich owning Micron at $95 will rush to buy goods that they can barter or that will at least make them feel as though they have something. That will shift demand and prices rapidly. Of course, even if I'm wrong, overpriced stocks, on which I own puts, will fare much worse than cheap commodities.
I am happy to play straight man for The Naughty Business Report.
MB |
