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Market Food for thought, Wed May 30, 2001
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"Among the hazards of speculation the happening of the unexpected -I might even say the unexpectable - ranks high. There are certain chances that the most prudent man is justified in taking - chances that he must take if he wishes to be more than a mercantile mollusk" --Reminiscences of a Stock operator--
Market Food for thought
5-29-2001
11:00 PM ..West Palm Beach time…
Was the dish just served over the lest 8 weeks inflationary, recessionary.. or was it a dish served that most economists and analysts just plainly missed.. otherwise a dish served cold to most ? I suspect when it is all said and done it was a dish most did
not expect…. Not all traders but most !
Currently there are a lot of economists Crying warnings of inflation… as are the Talking heads…
However during Late May of 2000, Gold was 275ish…today it’s 275 ish..
Please tell me, where is the inflation ? In Raw Commodities such as Grains, Softs,.. Energies..NOT...same thing as gold…With the exception of Lumber all are at last years general price region…with the worst of all cotton at multi year lows…So where is the inflation ? not here not now !
But ‘they’ pound the table .. If it’s not inflation then Something must be wrong .. the market has gone too far they say.. too fast..it’s not supposed to go up…So the weathermen ..(oh.sorry) the economists pound the table and say if there is no inflation there must be slow growth or no growth at all … forget the recession they so soundly predicted months ago …which in my estimation has yet to arrive and most likely will not.
The current economic and political environment leaves the Fed with plenty of room to continue an accommodating posture .. The Ole Copper Local has yet to indicate otherwise and most likely will not do so until sometime next year..
But the Bond futures have fallen from lofty levels.. rates have risen… as ‘they’ foam at the mouth ! It must be inflation !
Just Eight weeks ago Bonds Futures were at their highs .. Market participants were poised for the Crash of all crashes, out of stocks.. long bonds and heavy in cash.. .. Then stocks began a rally ,, the bond bulls blew their long positions and are now short big time.., stock bulls re-entered the mkt .. and began buying , and now are taking a bit of profit as the month end approaches…
On to the Consumer …confidence has risen a bit .as it should One thing the consumer should be happy about is the over 60 % decline in Natural Gas prices since the highs last year, while Crude and Unleaded Gas prices have risen a bit it’s not yet restrictive and with all the hype about Unleaded Gas prices , I suspect that move is nearly over !
So what may be the next dish served.. ?
Well , the last thing anybody wants especially the Fed is a continuation of a deflationary spiral ! which indicates a lethargic and scared consumer …so the next dish ?
Possibly something that has not occurred in quite some time, .but is a normal occurrence during times of normal growth and low inflation during times of recovery is for Both Bond futures and Equities to move higher in unison….. most likely exactly what the Fed wants to happen ! …
A ship in Harbor is Safe.. But that's not what ships are built for
Happy Trading !
Wed May 30, 2001
12:35 AM
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