Would love to hear other commentary. My 2 nickles.
It may appear that they are somehow "exporting" inflation, making it someone else's problem, or more so than the U.S. problem....you know I am trying to play devil's advocate and figure out a way that the U.S. can come out of this unscathed and to give some kind of credibility and true belief in this "bull" market rally, but I just can't. Based on my assumptions that the dysfunctions we are seeing right now in the U.S. markets, there is NO WAY we can avoid a downturn.
Check me on this. It is my belief that the main drivers of the growth of the equity and commodity markets are threefold:
-ROI(lack of better opportunities right now vs. other investments)
-QE2 (artificial equities inflation, and a short-term/temporary boost)
-global growth (because our country's wealth is heavily weighted to global economies.
So QE will end soon.
China's growth is starting to slow. The world's economy is starting to slow (aside from Australia and a few others). Europe is a mess. The U.S. seems to be at a true bottom, but I still can't figure out the job numbers. (ADP's numbers net numbers?)
Anyway, now we have to deal with inflation, especially commodity inflation which is already here, just wonder how much worse it will get.
I also believe that some of the earnings surprises we have seen lately are from companies contracting and cutting, and also from companies that benefit from inflation. The "real" growth story and numbers will come to roost later this year, possibly even 3rd or 4th qtr 2011.
Just some rambling thoughts. Would love to hear other theories and opinions.
You make some good points. I think we are in for a cataclysmic adjustment in the stock market.
The traditionally accepted metrics for a healthy, growing economy are this:
(I guess if we don't count food and gas, it is low. Unfortunately, I have a bad habit called eating...and I don't like walking to the grocery store to get more).
(Enough said. Who knows what the real numbers are once you lump in the unemployed and the underemployed).
-Robust Housing Market
(Yup, all good there. Hey, what happened to all of that equity I used to have?)
-Controlled federal deficits
(No problem. Congress has our backs. Just be prepared to sit your kids (and their kids) down for a serious family meeting at which you can proudly announce that none of them can ever count on retiring because they'll be too busy paying off our debts via higher and higher taxes).
Heck,after reading this, I think we are in fine shape. I feel a lot better about life in general.
Also, I hear commentators talking about how Americans are a bunch of whiners because our gas prices are still among the lowest in the world. These idiots totally ignore the fact that we are not some small Euro country that has state of the art public transit. Most of our cities are spread out and are wonderful government allowed us to be set up as a automobile commuter nation and addicted to oil. I have been to Europe a several times and I am totally jealous of their public transit system. My wife is from Europe. Her brother makes $60,000 usd per year, has no car payment, no car to fill up, no auto insurance payment, no repairs or maintenance, no registration, (no payment for his flat BTW) and has saved and invested like crazy for the past 20 years and has close to $500,000 set aside. He just took a hiatus and has spent 6 months on vacation and Europe and is spending 6 more months touring South America.
Not saying that this is the result of not being forced to buy a car, but it sure helped. Most Americans do not have a choice.
Excellent points. The low inflation point is funny. I enjoy sarcastic wit.
Using core inflation numbers is okay for a long term perspective and is tolerable when you are wealthy because you can ride out the ups and downs with food and energy cost fluctuations, but for us working class folks headline inflation is much more pertinent because we are feeling the squeeze everyday.
Actually, we are importing inflation. When the economy was bad, the QE money actually went to hot developing countries, and they had super-inflation. When our economy is improving, money then comes back, and cause higher inflation
Keeping things connected, my reply to you in the other thread.
I think the inflation is part of the plan...
It is a form of tightening that is not recognized as tightening..They will use it to strip money ..liquidity from the system...
So is the low interest rates...It is not increasing housing prices or sales.....just a way to force all the investment dollars into the inflated market.....so they can pull the rug out from under investors and rob the IRA and 401k money....
China ... is decreasing its exposure to the dollar...Japan will to but for different reasons ...needing the money to rebuild..
all while the dollar decreases in value..
The final blow will be to raise interest rates..
to pull as many dollars as they can out from under peoples mattresses....Then Mark to market and collapse the banks and break the FDIC...
world will be broke and an elite few that have benefited from all of this will buy up everything on the cheap that they did not already reposes....Then the rest of the world are slaves and renters for life...How many articles have been out about renting is best for now....Then when they have all the dollars it goes back up.....wanna work for 10 cents an hour or starve and live under a bridge..
The elite do not believe we are human and deserve anything...