OK. Fed Rally's over. Now, it's time to sell again.
Let's face it, the economies "soft patch" is more like a "sink hole!"
Basically, everything is going to Hell in a Handbasket, and that is
going to continue for quite some time.
The period we're in now might just be that STRUCTURAL "soon or later"
that people used to talk about during The Bubble.
Clearly, higher rates will draw money out of stocks and into,,,,well,
bank accounts! But not bonds!
Oil is still a long term problem. And, if Dubya is re-selected for a
second term, well......WAR IS INEVITABLE. My hunch on oil's next
stop? Some "little voice" keeps telling me: $80! $80! $80!
But, with the Republicans in office for four more years, you'll have nothing to fear: except God and Osama, but not necessarily in that
order.
Dubya's re-election will be a BIG GROANER for the bond market. And,
Mr G will be "defending the dollar" 24.7, and that means much higher
rates. Much, much higher. And remember, it's never too early to
learn to spell: STAGFLATION!
IT'S COMING...... Hint: That's really how this story ends, But
shhhhh.....don't tell anyone yet. OK? It's supposed to be a secret.
And as I've already said, the ten year bond at 7% will come
sooner rather than later. Ah,...Normalcy. And, passbook savings
accounts for mom and pop too.
Paul Krugman in the NYT today says he doesn't understand why the Fed
is raising rates when jobs are punk, and getting "punker" every month.
Well, it's all about the dollar really, and the dollars "special
relationship" to oil and global finance.
It ain't easy being a "reserve currency!" And, nobody said it would
be. Certainly not Keynes! Sometimes you just gotta defend the
system and let the wage slaves sink or swin on their own!
THAT'S WHAT THE FED IS DOING NOW.
Postscript: Absent a dollar collapse, the Fed will sit out the next meeting in homage to the election. But after the election, I expect at least one big 50BP hike later this year; that should sent the Dollar Bears back in the caves, until after the Inaguration of the next President.
But if it's Bush? All Hell breaks lose next year: IN BONDS! WITH THE DOLLAR! AND WITH OIL! Because EVERYONE is going to be "pre-positioning" for a Doomsday Scenario during DUBYA II.
