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May 8, 2006
Unreasonable rise in U.S. equities, Mon, May 8, 2006, 5:17 AM
The cover for today's anticipated rally in the U.S. equity market (see my weekend WIR report) will be a Crude Light price that has fallen below 70. Another boost will be given to the now expected pause in rate hikes coming Wednesday at 2:15pm. But this is madness.
The simple fact is that a crashing U.S. bond market, and a crashing USD, is an indicator of unstable financial markets.
Ultimately, the message from U.S. bonds and dollars is that inflation is going to get out of hand. So, yes, you can enjoy what will soon be a record high in the Dow 30 Index, but my plain vanilla take on these goings-on is that the death of U.S. bonds and dollars is just the first two caskets to be ordered.
In a couple months, U.S. equities will also be six feet under.
The fact is that any rally in equities on the back of a collapse of bonds and dollars is simply not a sustainable one.
That Wall Street bankers are not screaming this message from the tops of bank towers today is possibly because they are busy strapping on parachutes and getting ready to jump.
Posted by Posted by Bill Cara on May 8, 2006 05:19:14 AM | Category: Cara Today in the Market
Bill,
So in two months how will this leave the oil, gold and metal stocks? Thx.
Posted by: cndsands![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
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May 8, 2006 9:52 AM [link]