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Posted on 10/16/2010 8:42:42 AM PDT by FromLori
Everything from gold to rubber is reaching new highs. And that's just one of many landmines the stock market bulls are ignoring.
If Chuck Prince were in the game today, he would be dancing. In 2007, the former Citigroup CEO famously addressed a question about the bank's push into the booming mortgage market by saying: "As long as the music is playing, you've got to get up and dance. We're still dancing."
As we well know, that music eventually stopped and many of the revelers were crushed. But memories are short. Today, plenty of investors are dancing as the S&P 500 pushes higher, even while the already-elevated quantitative easing expectations continue to weigh on the dollar. It's just a matter of time before the music stops playing and the consequences of a debased currency are brought to bear on this economy.
There are many landmines scattered from New York to Beijing right now, and if the market lands on any one of them, the party will be over.
One major landmine is in Washington, DC: the Federal Reserve Board. The market has already begun to bake in expectations from a second round of quantitative easing, and an unlimited supply of money can dwarf the supply of some commodities. As a result, the Fed's policies are inciting increased speculative risk, thereby creating a commodity bubble.
Just how much of a bubble? Consider the following:
I am considering, what follows?
Me too forewarned is forearmed
Where’s the link?
Gold is not in a bubble.
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