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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (2819)	12/3/2003 9:44:58 AM
From: Silver Super Bull	Respond to of 110194

Russ, Yes, the signs of commodity inflation seem rather undeniable. I guess the bondholders think otherwise, however. Dines has mentioned a rather interesting hypothesis. He says that gold and the stock market can both rise when inflation is present. I haven't heard him elaborate on that, but theoretically, I really can't see how one can justify a strong stock market in an inflationary environment. Especially in today's environment, when it seems like "correcting" an inflationary problem (presumably through much higher interest rates and a withdrawal of credit) would be exceedingly painful. It would seem to me that in an inflationary environment, companies would be facing rising costs (especially raw materials, labor, health care, etc) while there is no evidence of any pricing power. Mix in any adverse demand implications because of rising interest rates, and it could be a real "witches brew" of adverse operating results for many (most?) companies. DB