sorgmot

Thursday Outlook: No Inflation? Who Knew?!

Great graphs. Its all there. Well maybe not quite all, how about commodities and foreign currencies?

Our estimate is that USA interest rates are in long term upward trends begun in 2003 and capping in 2050.

The USA interest rate run up will do the same damage to USA asset prices (bonds, stocks, real estate, and USA dollar exchange rates and commodity buying power) as did the period from 1933 to 1980. For bonds, stocks, and real estate, the price to earnings ratios will fall. For commodities and foreign currencies, their prices will rise in term of USA dollars.

For the rest of 2008, we expect the trends that your charts show to stay in force. Stocks down from May 19th to September 2008. And, in that period USA interest rates up, USA bonds and real estate dollar prices go down. Also, commodities and foreign currencies to go up in USA dollars, now to September 2008.

These are guesses based on our readings of Elliott waves in extended versions of graphs like those you show. With USA business cycle periodicity also considered.

These expectations can all be changed in an instant by one or more exogenous events. Always diversity and alway see you financial adviser to design a portfolio appropriate to your particular financial circumstances and needs.