Andy, I'm not so sure interest rates are going to go much lower, before they first jog upwards. Do you recall earlier this summer when the Fed was almost ready to increase the discount rate, partly because of the frothiness in the stock market? They were greatly relieved when the July panic happened, and largely for that reason stayed the course.
Well, the market is even frothier now, and there's no presidential election in the offing. I don't think it's going to take very much in the way of inflation whiffs to get the Fed to act this time. Don't know if they have the stomach to do it before Christmas, but again, if they detect even a trace of inflation - especially wage inflation - I'm going to guess they will raise rates 25 basis points as a warning shot across the bow of this overheating economy.
If they do this, the market might FINALLY have a good enough excuse to have a healthy, purging, 10-20% correction. Before the end of January, I think the market will have begun such a correction even if the Fed has left things alone. Only a rate reduction can keep this overexerted bull going, IMHO! <g>
Paul |
