I go into the technical underpinnings of the present rally, as well as my expectations for where it could go.
But don’t think I have crossed over to join cheerleading squad. Here’s an excerpt from the realistic tail of the column:
"There’s an old saying: I cannot hear what you are saying, because what
you are doing is speaking so loudly. That’s my take on the Federal
Reserve: If it really believes inflation is so "contained" and "transitory,"
then why is it hell-bent on tightening rates for the rest of our natural lives
or until the next recession, whichever comes first?
The answer, in case you haven’t been paying attention, is the robust
inflation coursing everywhere through our economy, save for wages and personal
Indeed, real wages are actually down 2.3% for the third quarter. Total
compensation costs (wages paid plus benefits) are down 1.5% on an
inflation-adjusted basis. That does not bode well for consumer spending into
2006. This comes when the consumer is running increasingly low on dry powder. As
we noted previously, the consumer is nearly — but not quite — shopped out.
Meanwhile, actual growth — and not the estimated, preliminary Commerce
Department’s GDP data — remains modest.
This helps explain why my bullish posture is short term in nature, and
measured at that."
I requested this gets moved to the free side of TheStreet.com . . .
Restrained Rally Slowly Emerging
RealMoney.com, 11/2/2005 11:35 AM EST