Friday, April 18, 2008

The Debts of the Spenders: Equities Rally = Sucker's Rally

Equities rallies in a bear market are inevitably a poor bet. In volatile times, technical analysis models tend to fail and fundamentals reign supreme. The fundamentals of the world economy are rising inflation and volatile commodity prices as central banks prove unwilling to enact a coordinated, coherent monetary policy. Instead, we have disparate actors moving in opposing directions. For ex: The Fed is hell bent on debasing the dollar. Bernanke is supported by (unsurprisingly) the Asians and Arabs. Meanwhile the ECB stubbornly fights 2x digit inflation by refusing to cut rates and has even threatened to raise them.


Blog Archive