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October 31, 2005

The real Wave" to watch is inflation, Mon., Oct. 31, 2005, 8:15 AM

Traders throughout the world are now on Inflation Watch " at least the serious ones are; the others are listening to Kudlow, Cramer and CNBC cronies try to talk up a year-end market rally.

But keep your eye on the big picture. Inflation in Indonesia has been reported today at +13.1 pct Y/Y. A month ago the Indonesian inflation rate was +9.1 pct Y/Y. That's a move from red hot to white hot.

But maybe the TH's on CNBC think that Indonesia's 242 million people live in a vacuum? So maybe they should look at the neighbors in Malaysia, Thailand and the Philippines. All told there are about 3 billion people in this world, living in what is known as the Emerging Economies, who are facing much higher inflation rates presently over what they had a year ago.

Given that America is importing this inflation, the Fed has no option but to hold the line. The FOMC will meet and announce their policy and guidance decision tomorrow. You can expect to hear from Greenspan on the topic of inflation. And the VIPs in Washington are sure to get the same message.

You already know his message of course because he gave it last November " right before the stock market crapped out. At that time he said that any investor failing to prepare for the coming of higher interest rates must be desirous of losing money".

And I don't think my readers are stupid to the point of putting their trust and faith in Kudlow, Cramer and Co ahead of the Federal Reserve Bank.

Posted by Posted by Bill Cara on October 31, 2005 08:16:58 AM | Category: Cara Today in the Market