The Fed Doesn’t Care About Inflation or the Dollar
Gary Kaltbaum
is an investment advisor with over 18 years experience, and a Fox News Channel
Business Contributor. Gary is the author of
The Investors Edge. Mr. Kaltbaum is also the
host of the nationally syndicated radio show “Investors Edge” on over 50 radio
stations. Gary is also editor and publisher of “Gary Kaltbaum’s Trendwatch”…a
weekly and monthly technical analysis research report for the institutional
investor. If you would like a free trial to Gary’s Daily Market Alerts
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After watching S&P hold 1490 several times…and after watching market ramp
into close yesterday, I figured market could get more upside testing. On radio
yesterday, I stated as such but also stated that for all I knew, we could wake
up the next day and see the market down 200 points. Well, as I write this,
futures are down 130 DOW POINTS as Cheng Siwei, vice chairman of China’s
National People’s Congress, told a conference in Beijing the country “will
favor stronger currencies” when adjusting its $1.43 trillion of reserves. This
has the dollar swooning again. GOLD and OIL have been moving recently because of
this. What does anyone expect? Why invest in a currency that is being crushed?
The bigger problem here is that this administration has been impotent when it
comes to the dollar. Every now and then, Sir Hank states they want a stronger
dollar…but we all know better.
The question is when does this affect the stock market? As I have always told
you, there is never a problem until it affects stock markets. All this subprime/mortgage/lending
crap was not a problem until all the stocks came tumbling down. So far, the
dollar drop has been somewhat slow and contained. It best not start dropping
quickly and uncontained.
There is a simple problem…Fedheads around the world are raising rates
because of inflationary pressures while our FED lowers rates. As I stated on TV
right after the first rate cut…”this Fed has dropped any pretense that they
cared about inflation and the dollar.” Our government tells us there isn’t any
inflation. They are correct. If you do not eat…if you do not use gas…if you
do not smoke…if you do not buy insurance…if you do not pay for
healthcare…if you do not breathe…if you are dead…then there isn’t any
inflation. The one surprising non-outcome has been the bond market. I would have
expected by now that rates on the long end would have spiked to compensate for
the dollar but that has not happened.
Well…the market will have another chance to reverse again today. I do not
think the “market” is in trouble here unless 1490 is taken out…next year may
be different as the action we are seeing reminds me of late 99. This does not
alter my thoughts that no matter what, this is the mother of all split tapes
with a vicious bear in the many areas I have mentioned in previous reports.
Continued bull markets can be found in areas like OILS, COMMODITIES, GOLD,
SILVER, SOLARS, FERTILIZERS, SHIPPERSand BIG-CAP TECH.
The futures will change before the open…but are expected to be down. Should
be another fun day in Fantasyland!
Gary Kaltbaum