RATE HIKES SEEN BY SMART MONEY...
WELL...DUHHH...!
ANY RATE HIKE WOULD BE BAD FOR GOLD...GOOD FOR THE DOLLAR...BUT BAD FOR STOCKS AND BONDS...
IF RATES GO UP...BONDS GO DOWN... BUT IF RATES GO UP STOCKS SHOULD GO DOWN...AND THE HIGHER RATES MAKE STOCKS "LESS ATTRACTIVE"...
THERE SEEMS TO BE A SENSE THAT THE FED WILL START "MOPPING UP" SOME OF THE ABSURD LEVELS OF LIQUIDITY IN THE SYSTEM IN 2010...AND THAT SEEMS LOGICAL...
AFTER ALL...LIVING IN A FANTASY DOES HAVE A "SHELF LIFE"...
HERE'S THE PROBLEM...THE CONSUMER AIN'T COMIN' BACK...NOT NOW NOT EVER...
AMERICANS A WHIPPED...BUSTED DISGUSTED AND CAN'T BE TRUSTED...!
HENCE THE CREDIT CONTRACTION...OR LACK THERE OF...
SO IF THE CONSUMER IS PUNK...STOCKS SHOULD BE PUNK...AND WITH LESS "FREE MONEY" IN THE SYSTEM..."DOUBLE PUNK!"
BONDS COULD RISE RATES FOR THE FED...BUT THE FED WOULD BE DRAGGED INTO THE FRAY SOONER OR LATER...
AND TRADITIONAL WISDOM IS THAT A DECLINING BOND MARKET IS "BAD FOR" THE ECONOMY...
BUT THE MACRO GUYS IN THE HEDGE FUNDS...LIKE SIMPLE BETS...TWO AXIS...'X' AND 'Y'...
NO NUANCE...IT ONLY CONFUSES THE MODEL...
WHAT IF RATES RISE...BUT THE FED KEEPS THE MONEY NOZZLE WIDE OPEN...?
THIS IS POSSIBLE... WHAT THEN... WELL THE WHOLE THING COLLAPSES AGAIN...
I THINK BERNANKE STAYS LOSE ALL YEAR...ZERO FOR ALL OF 2010...AND LET THE BOND MARKED GO TO HELL...
THAT WOULD DRIVE SOME MONEY INTO GOLD AND OTHER HARD ASSETS...
IT'S HARD TO EXPLAIN A ZOMBIE ECONOMY...
