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History Books

By

Sour puss!

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One way or another I'm gonna find ya
I'm gonna getcha getcha getcha getcha
One way or another I'm gonna win ya
I'm gonna getcha getcha getcha getcha

(Blondie)

There's been a lot of debate recently regarding the state of our -ation and I wanted to pen some quick vibes. As old school Minyans know, I was in the deflation camp for the better part of 2002 and 2003 and felt that money would become scarce and scarcer (and a dollar saved would increase in relative purchasing power value). During last year's lift, as Elmer flipped the spigot and flooded the market with liquidity, I hopped the fence and pitched tent in the stagflation nation.

The recent banter in the 'Ville has gotten me thinking of our path of future frustration. Stagflationary tendencies have clearly emerged. There's been sluggish growth (4% with negative real rates), inflation (oil) and a trend towards higher unemployment (jobless claims). This has evolved, in my view, despite lotsa fiddlin' by the Bureau of Labor Statistics and substantial "influence" by the Fed.

The truth of the matter is that our ultimate course is still unfolding. If Elmer weans us off the uber-reflationary course we've been on, there will likely be a period of "un-reflation" or, put another way, deflation. If he continues with his easy money "don't worry about it, our kids and grandkids will deal with it" policy, the stagflationary elements will become more pronounced and troublesome. Rock and a hard place? Yeah, something like that.

As Collins and I review my Crested Butte presentation, we started talking about the evolution of the markets and the dynamic nature of our business (the topic was the identification of cycles, trends, phases and nuances but it's applicable in many ways). The script is still being written and, as such, there's no way to know with certainty which way the cookie will crumble. All we can do is assign probabilities to potential outcomes and posture ourselves accordingly. The scary part of our current juncture is that most paths lead to the same place.


R.P.

No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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