Random Thoughts On The Economy & Markets
31 August 2010
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This is probably only for those of you that follow the economy, the Fed, and the markets. I haven’t thought through much of these but this is more me just thinking out loud here…
- Everyone knows we have a bond bubble. The question is when does it peak? Shorting bubbles is very tough. Here is one guy who thinks it might be that time.
- The counter argument is that the Fed will never allow a Treasury sell-off because they will just monetize and basically put a floor under them. It will be interesting to see if there’s a sell-off even while the Fed monetizes? Or will a sell-off be what forces a massive round of QE? What a terrible equation.
- The economic data is terrible – will the markets reflect this at any point? Yes, I know the markets are down from April highs, but will the markets head towards the March ’09 lows?
- Will retail investors continue to abandon stocks? I see more and more baby boomers saying “to hell with stocks” as they pull back and prepare for retirement & retrenchment. The terrible thought is if baby boomers get wiped out by a bond bust.
- Does any of this sound stable to you? If not, what does sound stable? Maybe gold? How many of you have a hard time pulling the trigger on $1250 gold (gold coins will probably run you $1300+)?
- How many people that actually have money are a train wreck trying to determine where to put it?
- Does anybody have any money anymore?
- Confidence is still moving lower I think – which, in turn will probably still push gold higher.
Any reactions to any of this? Let me know.
didnt consumer confidence actually go up in august compared to July? I know its still historically very low, but with the recent rise in consumer spending coupled with this small bump in consumer confidence i wouldnt say that confidence continues to move lower. the market took numerous bad economic reports over the past few weeks mainly related to housing and yet i am not seeing a nosedive. what gives?
You permabull you
I follow the data you mention, but it doesn't really form the basis for my strategies.. regardless of the month-to-month volatility, consumers are not going to spend what they were spending a few years ago no matter what.
Yes but its unsustainable. Can't happen. We've peaked our credit bubble. Can't go back no matter what the Fed tries to do – even if they destroy the dollar in the process.
What good is 20,000 on the Dow if gas is $15 / gallon?
They've already thought of that problem…We're all going to be required to drive A+ graded Chevy Volts, then we will only use 2 gallons at $15/gal rather than 12 gallons at $2.5/gal. You're still only spending $30 for gas, right?
Let's just hope my income doesn't lag too far behind inflation, or I might have trouble making the $1,000 lease payment on my Volt.
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