The Deflation Equation Becomes Clearer

Saturday’s NYT has an article by Floyd Norris that goes into what has been happening with money flows in the past year.  In spite of the frantic talk of debt and $ 3000 gold in the mainstream press, the fact is that except for the government, all the other sectors are sitting on their hands.  This means that total economic stimulus is anemic historically.  See article:  http://www.nytimes.com/2009/09/26/business/economy/26charts.html

Of the markets that we follow the most, stocks, bonds, currencies, commodities, gold, and oil, only oil has pierced its 2009 bubble at 67.70 so far.  S&P’s are holding well above their bubble bottom at 993 and gold above its bottom at 959.  On the dollar we would need to see a trade of 78.20 to convince us that the anticipated up-move is getting legs.

7:59 AM CDT