Tuesday, May 19, 2009

Headed Higher

These markets are determined to head higher. You can't fight the tape and my analysis yesterday of when all of the talking heads are in agreement---go the other way. We could see 1100 on the S&P before another major correction. The money on the sidelines must be coming in out of fear of missing the buying opportunity of a lifetime.

I still contend that we are going to see inflation and the market rise will contribute to it. The markets will make individuals more confident to spend as they will feel wealthier. I have said over and over that the money multiplier will not remain at these low levels for long and when it moves up inflation will take off.

The housing market still appears to be lagging and will have to stabilize before we see the hyperinflation scenario that we have been fearing. Notice I said stabilize not grow. It only has to stop falling to be the final ingredient in the inflation mixture.

Some of our guest have contended that the Fed can pull in the liquidity faster than ever before because they can just not renew some of the troubled assets they have gotten through the discount window. I don't know that I subscribe to that theory.

I still like FCX but wouldn't chase it here. Natural Gas through the UNG is worth a look but I wouldn't chase it either.
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