MR DODGE, Great chart post. I just finished looking at the Dollar, Oil, Gold and Dow/SP Oil is breaking out...next level 90....thats good for me. I could not find anywhere, in historical charts, where the Dollar getting crushed and the DOW rally' was good let alone anything like what we have now. The nexus between a stronger dollar and a Bull Run is far more historical. So, the question is....who the hell is falling for this bullshit rally? Sure, Make Hey while the Sun shines.....if you where long....your happy. If you missed the stock rally, like I did, you shrug your shoulders because you were in other "areas" than have given you 40% returns. Nevertheless....who is falling for this? GDP is only projected on an average of 3.% over next year. Cost of Living in OIL TERMS is going to rise, food prices rising, consumers not spending, more jobs to loose, very little hiring in the Manufacturing Sector. Look at the East and West Coast...11%-15% unemployment in those areas? The play I see is going long the vix, even at 23. I can't see the VIX falling back to the teens anytime soon. I can see the VIX ralling while the market rallies. The Fear is not on the short side...its on the long side. However, even with the printing press, dollar getting crushed and replaced as a key reserve currency...Hyper-inflation? I dont think so. Oil at 150...yes...but not due to "HYPER INFLATION". Due to Flight to Quality.
All the fed has to do is to raise rates and this would effectively not only increase the demand for money, but also indirectly reduce the money supply. The demand would rise as many would be looking to lock in loans at lower rates. The money supply would indirectly shrink as those who have hedged against the dollar using dollar denominated loans to purchase other currencies will inevitably need to pay back those loans before they get screwed. The money supply would also indirectly shrink as banks would find federal reserves at higher interest rates a nice attractive place to park money as opposed to loaning it out. Sorry...but the idea that somehow we would have Zimbabwe inflation and that the fed would just sit there and let it happen is food for conspiracy nut cases...not the real life.
Exactly. In order for Hyper Inflation to take hold, the money being printed would have to make it's way into the hands of the public. It's not. It's being stopped up by banks. Banks which, instead of shoring up reserves and balance sheets (because assets that are quite bad are off balance sheets and not recognized at anything but full value - thanks, FASB) are investing into asset classes. This drives up the prices of commodities, but does nothing to the greater economy. Eventually, this commodity inflation will have a pass through in higher production costs, etc., but hyper inflation? I don't think so.
Dont fight the tape, Mainstreet/Seniors get the shaft Wallstreet wins that Bull run is very profitable for now. Lots of companies hoarding that cash, Lots of printing of dollars and taxpayers funding Financials,wallstreet. Everything I have been looking at still points to a move towards a continual bull run with a few smaller corrections here and there. Wallstreet recognizes that Obama is willing to play ball.
Wonder when the dollar index breaks 70 :eek: not worried, everyone says a worthless dollar is the way to go. Inflation??? What inflation.....
GO BULLS! IV dropping like rocks as well. Those who fought the tape and did not get on the Bull Train are paying the price.
Markets still rallying. Like I said the dollar is going to shit and Markets will rally further as dollars get diluted and the future dollar dilution makes high quality stock more attractive.
the dollar kept getting stronger and the market kept rallying since you said the rally will be due to weakening dollar.
Of course, as long-term interest rates go up, it becomes very difficult for firms to borrow, and hence, the value of existing productive assets increases in terms of the cashflows they can deprive (same demand chasing increasingly limited supply). 2 things that stand out in this environment: a) Traditional stocks that should be highly responsive to future inflation, aren't. b) All nations are highly correlated, even though certain nations are clearly outperforming (ie: Canada versus the USA, for instance) in their actual, "real" economies. At some point, things should de-couple though. Bank stock valuations are completely irrational, while, for instance, XOM shares are a deal of the century.