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Minyan Mailbag: Elephant in the Room


Easy Kohn-Head!


Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next column with that very intent.

The CRB Index is right now sitting on trendline support that dates
back to November 2001 low. The elephant in the room is right now
nicknamed Inflation, but if the commodities trendline is broken, I
wonder how long it will take for that elephant to be squeezed out and
replaced by something else?

Scott Reamer wrote a great piece about deflation and decreasing time preferences. Now, take a look at what Fed Governor Donald Kohn said this morning

"The federal funds rate appears still to be below the level that we
would expect to be consistent with the maintenance of stable inflation
and full employment over the medium run.

"And if growth is sustained and inflation remains contained, we are
likely to raise rates further at a measured pace." Further Fed
changes to interest rates should induce an increase in the personal
savings rate, by increasing a return to saving and dampening the
upward momentum in housing prices, Dr Kohn said."

My reaction to that is be careful what you wish for, you just may get
it; some elephants play nicer than others.

Minyan Pepe

No positions in stocks mentioned.

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