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To: Simba who wrote (272739)	1/6/2004 1:10:18 AM
From: mishedlo	Read Replies (1) \| Respond to of 436258

Equities do well if the expected inflation in the near future will be low and/or real earnings growth will be high. commodities do well if the expected inflation is high. Both going up together implies one of the market is "wrong" and it is most probably the equities. At some point the interest rates will reflect the expected high inflation implied by the commodities and the stocks will head south. Bush will hope and try to push that point after he gets back into the WHouse. Simba Not sure I quite buy that. Equities are going up because of overstimulus and herding and perhaps even the PPT stepping in at critical points. It is now a self feeding liquidity bubble like we saw in 1999. Commodities are going up due to the falling US$ and demand from China. I agree that one market is wrong. In fact BOTH could be wrong. Personally I think we end in a deflationaly crunch just Like Japan. It could take 7 years to play out to completion. The only question in my mind is how long this mess lasts. Right now it appears as if it can last until the election. After that, I serriously dout it can continue mush longer. The 64,000 question is: can it really last until the election. There is just plain too much debt for Greenspan to inflate us out of, so inflation is simply not self sustaining (especially in light of job losses, over capacity, and paycheck declines). That is what Japan found out and that is what we will find out. M