Le French

The Seduction of America

I agree with the author, however, wealth or personal income shouldn't be taken out of context.

what people seek is comfort. That's what money buys.
if you compare a car from the 60's and a car from the 90's, you would agree that the last one is more technologically advanced.

I think we should put into perspective wealth growth over the years with a discounted technological progress.

Could the Dow Fall to 1600?

I think you made a good point by looking at the corrolation between GDP growth and price-to-earnings / valuation growth. However, you didn't take into account the devaluation of the dollar. Same as the commodity bubble, the equity markets have been fuelled in part by the weak dollar in the last few years. The price of your stock can go up but if the overall value of your investment goes down proportionally then you barely break-even. As a foreign investor, to make money buying US equities I had to outperform the market. The US dollar is mainly dependent on 3 factors:
(1) the level of US debt
(2) the US trade deficit
(3) Fed interest rates

The reason stock market has been like a slow motion train wreck and didn't crash is simply because of the recent political decisions which have strenghten the US dollar by leveraging temporarily consumer purchasing power and overvalued toxic assets, besides increasing rates of savings from people getting out of the capital markets in cash.

taken from an economic survey on crude oil prices:

"It is also of interest to note that the average nominal price for the OPEC basket of $24.36/B for the year 2002 was equivalent to only $6.53/B in 1973 dollars. The nominal price was more than eight times as much while the real price was only just over double. The main culprit was inflation and not the dollar."

source:
www.mees.com/postedart...

When Central Bankers Clash, Stock Markets Can Crash

BTW, Very complete article. Thanks.

When Central Bankers Clash, Stock Markets Can Crash

Could a rate hike by the ECB in July trigger a worldwide pullback in the stock market (and therefore hijack the Fed role) ?

High Likelihood of a Market Crash

I believe that the smart political move that carry on the geopolitic agenda would prefer a crash in october or after the election. Enough time for short-sellers to get squeeze and trigger a late rally this summer. What's gonna happen next? a not-so-unexpected raise in interest rates in september on top of a world food crisis which will crash the stock market.

My bet is on the table. The game is on.

Now the question is for you guys, do you want to stand on the sideline for the next six months, or do you want to grab that last rally to the summit?

U.S. Markets: A Ton of Doubt Calls for Caution

I think we need a good "last breath" rally for july, then when earnings suddenly show up worst than expected, after the Olympic games, then the market will sink 20%. Sentiment is way too bearish for such thing to happen now.