A Day for the “think it knows group”
Since the Fed action we have talked about what the market knows and doesn’t know. Today is a day when the players of “the think it knows group” try to make their case of a stock market in consolidation and are encouraged by the Fed members who say that inflation is not going to be a problem.
I agree, I don’t see any inflation on the horizon. What I am concerned about is how all the QE’s don’t seem to be able to provide a solid base for economic recovery and employment gains. Consequently I believe we are are in the early stages of a deflationary cycle which has at least six more years to run. In this scenario T-bonds will go down because the bond holders will need the cash to support themselves and the dollar will rise because we will be in better shape than Europe, China, and the emerging nations.