I think it does. It set it last HIGH one and a half years ago! World markets are intertwined these days.
They are worried about inflation, and should be, they have raised min wages twice this year, one time by 20%.
Here the FED is seen as savior, not instigator. FED low rates foster major imbalances but flow liquidity to stocks, a target of their largess.
Read here Doug NOlan's ISSUES 2011
"I’ll posit that each year of massive government marketable debt issuance reduces the likelihood that central bankers will be able to exit their market liquidity backstop operations. History has shown how systems become precariously addicted to inflationary measures and market interventions. The Fed’s balance sheet will only move in one direction. And when push comes to shove, they may be forced to buy municipal debt or monetize more Treasurys to help finance bailouts. For now, the most important Issue 2011 is that serious structural deficiencies ensure that the Federal Reserve errs on the side of liquidity creation. This would seem to ensure a year of even greater Monetary Disorder, with the risk of heightened instability throughout global fixed-income, currency, commodities and equities markets."
I was listening to financial radio this morning....."buy Ford, but Citigroup, Buy Amazon, Buy Apple......" there was NO talk of valuations, excessive bullishness or possibilities of a correction.
We had a 16% correction last summer, and Lowry's points out NO BULL MKT has ever had 2 PLUS 10% corrections.....and none expected yet.......but maybe 5%?
2011 it would be nice to see some real economic progress, but patient is on GOVT and FED teet and without it, cannot go it alone....or FED FUNDS would not be 0%.....have fun for now, but this kind of prop job cannot last forever and will leave a nasty hangover IMHO.....WHY isnt CHINA jiggy?
D
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