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« S&P 500 Extremes | Main | Laszlo Birinyi on Bloomberg TV »

Comments

Whew...there is MUCH to chew on here...but I'll give it a whack:

US $$ -- I'm guessing a trading range...but not a collapse. The weaker $$ will trim the trade deficit.

M2 -- we have already been swimming in liquidity (global)...which ties in with the lower yeilds...liquidity chasing yld. It also ties in with my view on inflation (cue the X flames)...it's dead, excluding the commodity "push" inflation. The Internet, and the emerging global (new) players are all too happy to make/sell whatever we're talking about cheaper. No pricing power (execept commodities). Outsourcing and the efficiency of the internet market has taken a hatchet to inflation. Deflation might be a bigger threat (at some point).

Conclusion: a new wave of global efficiency/productivity (the S curve of technology) and billions of new consumers/workers will launch us into a 3 year bull market.

Flame away! ;o()

Good thread, btw.

Hyman Minsky - Periods of stability create instability. The time to worry is when people are quoting assinine things like Goldilocks. The Fed has exacerbated the problem by telegraphing its actions. That has allowed global leverage to increase to astronomical proportions with strong confidence the Fed wouldn't crack them upside the head.

Too many comments about China, global real estate, a policy of resetting the dollar trading bands by the Fed and commodities bubbles to type on here. But, a potentially perfect storm is brewing. The chances of them all coming to pass and this being a huge mess are quite small. But, we will, at the least, have an earnings recession. Input costs are just going through the roof. The labor market is truly tight even if wages aren't rising so productivity is going to be pressured. Something has to give. Commodities and hard assets? The E in PE will evaporate. Productivity craters? Wage inflation. Profits continue to rise requires a pass through of costs at this phase of the cycle.

That is totally discounting the dollar, its impact on long rates, global trade, inflation, mortgage backed securities mess, credit derivatives fiasco with GM and Ford accounting for $2 trillion of that market, auto industry bankruptcies, oil to $100 in a blow off, moron politicians screwing with global trade, raising taxes, global strife, etc.

We need a purge to set our path higher in equities. The global hedgies won't drop the ball on the commodities bubble till they break something. That means when commodities abate, we are screwed this cycle. The market is priced to perfection for the leaders in this cycle. The first set of leaders in this asset driven cycle are already collapsing-homebuilders-there is no reason to believe the others will not follow.

IT'S HOKEY AND KORNY BUT DON'T FIGHT THE FED!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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