June 12, 2006
Low Growth, inflation and a BAD MOOD = Horrible Market Cocktail
I am taking a loss in Mother Russia and will look to re-enter, but basically that market has seen two years of gains wiped out in 2 months.
The Gold stocks are being pounded again despite the stability in Gold.
Most worrisome to ME, is the pending closing breakdown in the Oil Service Index even though Oil stands above $70.
A good time to watch from the sidelines with just my Gold Longs, my shipping shorts and a few selected names.
It is realy painful to watch so I am not and paying bills, making phone calls and evaluating a few short ideas.
The US market could crash as easy as it could rally and I am tempted to play the downside but am just looking for the perfect idea.
Despite the commodity pullback, there is inflation in the system, no wage growth and heavily service reliant United States that may suffer in this type of economy.
What that could mean is the DREADED STAGFLATION. Others from my blogroll agree. I don't really care about the terms or exact definitions as does CNBC - just the results.
Low growth and inflation is just BAD! If we continue this drip with no bounce you get a BAD MOOD. We are not a patient country that likes to stay in a bad mood for long. Things will get interesting very soon.