A Lack of Critical Thinking

One might ask why after March 2009 everything went up, and up, and up.  Whether it was stocks, gold, cattle, copper, oil, you name it, except for the dollar it went up until early December 2009 and was justified as the reflation trade.  A lack of critical thinking on the part of money managers kept it going.

Then the dollar joined in and most of the pundits said it didn’t indicate anything, it was just temporary.  Now the dollar is set to break out from everything and it is becoming obvious that the fact that Bernanke has not monetized the stimulus loans is really working.  We are seeing economic recovery without runaway inflation and over-pricing.

The end result is that the markets are going to congregate at real value levels and may overshoot on the downside.  Oil has been the early decliner this year.  Our beginning of the year forecast was a range of  66 to 85.  Subsequently the range has been 68 to 92 and now is near our low side projections. The fact that it overshot on the upside may create a problem with that forecast as the charts now point to possibility of a little under 50.  Watch this 66 slower projection closely.

Poor Greece, it is just the smallest player in the whole lack of thinking phenomena.

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