This market blows

[lemonjello]

Same old song and dance

Ummmmm. Yes?

Plus the $ is sinking like a rock. Corp financials may look good right now, but the US economy seems to be out of balance. One third of the GDP is based on real estate flipping - well maybe not that bad, but same idea. You can only stretch the rubber band so far. But, hey, we'll spend our way out of it and sell more bonds to Asia and real estate will only go up forever.

So are we at the point we were back in early 2000 were the fed will raise rates until they see the economy/earnings break?

[IIC]

Ummmmm. Yes?

Plus the $ is sinking like a rock. Corp financials may look good right now, but the US economy seems to be out of balance. One third of the GDP is based on real estate flipping - well maybe not that bad, but same idea. You can only stretch the rubber band so far. But, hey, we'll spend our way out of it and sell more bonds to Asia and real estate will only go up forever.

So Lemon...What is your take on this chart???

[IIC]

See the correlation?...Are things changing?...Is it a last gasp?

http://stockcharts.com/candleglance/?RYSBX,$HUI|C

[lemonjello]

I'm not even a junior chartman, but it looks a little barfy, if you know what I mean.

[IIC]

I'm not even a junior chartman, but it looks a little barfy, if you know what I mean.

No I don't...But it indicates to me that a possible change is beginning...But it could be a political fakeout???...I will only make short term trades until I think I understand what's going on...Best, Doug(IIC)

[lemonjello]

Barfy

Ok junior chartpeeps, does this look like it's going up or down? Maybe the they will decide to go back on the gold standard? Naaah. That would take away the Fed flexibility.

[mrmarket]

So are we at the point we were back in early 2000 were the fed will raise rates until they see the economy/earnings break? How long does it take the housing slow down to affect other segements?

It is baffling to be why the Fed continues to be increasing rates to slow down inflation when it is energy prices which will be what naturally chokes off demand.

The double effect of increasing interest rates and high energy prices will certainly kill the market.

[Jim Smith]

Well if the market loses confidence in Bernanke's ability to control inflation, we might be in for a lot more trouble.....We're due for a market correction, a big one.....I don't think it's going to be safe until we past the November elections.

[mrmarket]

Alright...tell me if this makes any sense:

The market was spooked by this week's inflation numbers because the so called "core" inflation was much higher than anyone anticipated. As a result, the fed will take a hawkish stance and will be inclined to increase interest rates in order to curb inflation.

However, if you dig down into the numbers, you will discover that 40% of the increase in "core" inflation is atttributable to increase in rental rates. The reason why rental rates increased is due to increased demand for rental units. The reason why there is an increase in demand for rental untits is because home prices became unaffordable. The reason why home prices are unaffordable is because Bermanke increased interest rates.

That's problem #1.

Problem #2 is that the rocket scientists who think that they can separate "core" inflation by pullling energy prices out of the equation must be totally on crack. The cost of energy permeates through everything we consume. There is no such thing as "core" inflation independent of the cost of energy.

There...I'm done. This market blows. Does any of this make sense to you guys?

[spikefader]

No, but I like to listen to you talk this kind of fundamental stuff. jejeje

Please hurry up and get to 82 so I can do another Crop! hehehe Actually dude, is there an easy and new and improved way to run your data dump? I remember reading how you did it and it seems like it would take hours! How long's it take you (or Karel) anyway? Thanks.

[alice4321us]

No, but I like to listen to you talk this kind of fundamental stuff. jejeje

Please hurry up and get to 82 so I can do another Crop! hehehe Actually dude, is there an easy and new and improved way to run your data dump? I remember reading how you did it and it seems like it would take hours! How long's it take you (or Karel) anyway? Thanks.

Spike you are too funny.

[lemonjello]

- Changing the reporting of inflation to "core" meant that the bubble price increases of real estate were left out of the core as were oil and food. WTF? So -

- Our government had decided to "push back" the reported inflation drivers so they wouldn't show up until they reached things like wages and rents. In other words - reported inflation would have been a lot higher in the past few years if house prices, fuel and food increases were included.

- Wouldn't it be great if we charge our Visa up and then pay it back at $.40 on the $ (without bankruptcy)? Pay attention to the part about paying back debt ->

WSJ May 18, 2006; Page A14
"Widespread fear of another global energy crisis is rife, especially in light of the confrontation with Iran. But the second of Murphy's Laws cautions that what actually goes wrong is seldom what we anticipate. While the markets are clearly indicating something ominous, the current situation is mischaracterized as an energy crisis -- even if the price of a gallon of gas goes past $3 and stays there. Energy prices are simply keeping pace with the rising prices of gold and other commodities. What we are facing is a money crisis: an alarming outbreak of inflation and all its consequences.

It's silly to blame the rise in commodity prices on foreigners; no country, not even China or Saudi Arabia, has the market power to set off the kind of across-the-board acceleration in prices that we have been witnessing. Nor can prices rising this consistently and at this speed be attributed to an excess of global demand over supply, or fears about the political situation in Iraq or Iran. Speculators, another convenient scapegoat, also lack the power to drive world commodity markets, in spite of their rapacious reputation. The real culprit is the precipitous decline in the world's mightiest currency, the dollar, which has lost more than 60% of its gold value in just four years.
...If none of the usual suspects is responsible for gold's sharp rise, what is? We believe it represents an equally sharp decline in the confidence of investors -- large and small -- in the likelihood that Washington will pay back its mounting obligations in undepreciated money. Throughout history, and especially in wartime, governments have escaped from fiscal over-commitments by letting their currencies depreciate. Ambitious spending initiatives, threats of international conflict and even Washington's political unpopularity all contribute to the fear that this is happening again now.

Gold is the barometer of public confidence in fiat money, and it is difficult to rebuild confidence in a currency once it has been allowed to slide. Gold has been a reliable harbinger of many economic troubles -- not just of escalating prices at the gas pumps, but of inflation, rising interest rates, stagnation and poor investment performance on the part of bonds and equities alike. Changes in the price of gold are an excellent predictor of all of these. The dollar's collapse is nothing less than a body blow to capitalism. When we downplay the significance of energy prices, we are not denying that a crisis is looming. It's just a lot more threatening than an increase in the cost of a tank of gas.

Mr. Ranson and Ms. Russell are principals of H. C. Wainwright & Co., Economics, an investment-strategy research firm."

[IIC]

Interesting subjects discussed here...CPI...How many times has the BLS changed the way they report CPI?...I lost track after 10...Gold...What's the Big Deal about gold anyway?...What I would like to see is a "Flight To Plastics"...because I'm getting hammered on ICOC...But think about it!...Take a look around your house...How many gold objects do you see???...Now, take another look...How many plastic objects do you see???...What's in demand???...IIC

[spikefader]

..Gold...What's the Big Deal about gold anyway?...What I would like to see is a "Flight To Plastics"...because I'm getting hammered on ICOC...But think about it!...Take a look around your house...How many gold objects do you see???...Now, take another look...How many plastic objects do you see???...What's in demand???...IIC

LMBO hehe .... flight to plastics ...jejeje too funny.

Problem 1) is cheap materials for much-loved tupperware, and
2) oversupply of cheap labor...

Otherwise it'd be plastic to da mooooooon! hehehe

[sowersnc]

Here is a chart that shows previous fed increases.

http://library.hsh.com/?row_id=88

The question is how far do they need to push it to break inflation.