Mike,
Just thought I'd put in my 2 cents about today's inflation numbers and the Fed.
I think this is a one month blip as far as +.07 and +.04 goes, but I think that inflation will trend higher this year compared to last.
Considering I thought that last year's 3 interest rate cuts were all about preserving the bubble, bailing out Wall St. and buying time for Asia to dig itself out of the hole, I expect nothing responsible to come from the Fed as far as our currency goes unless the CPI starts really getting out of hand.
I think a lot of other people think the same thing. So if AG doesn't raise rates in order to take back some of the cuts now that the CPI is trending up, his true colors as "easy Al the bubble king" will be obvious to almost everyone, not just the bears.
My view all along has been that I don't trust 30 yr bonds in the 5%-6% range if you intend to hold them to maturity. This little late cycle inflation blip doesn't effect my view at all about the risks or appropriate rate.
I don't quite understand why we didn't get a little more of a reaction on the shorter end, but I'm not a bond/bill guy so maybe I'm misunderstanding something.
Lastly, I still don't know what's going to kill the bubble.
A dollar decline, inflation, a tightening and then deflation or just falling off a cliff. It will depend on foreigners, the fed, etc... and I'm not a mind reader.
I don't like the dollar and think we're going to have all sorts of credit problems too! I'm just not sure when, how or in what order.
Wayne |
