Changing faces (deflation to inflation)
I'm pondering the flat market and the recent trading range
of 800-1000 on the SnP.
From 73 to 75 the price of crude tripled. At the time we imported about 1/3 of the oil we burned. Companies had no choice but to pass on the price charges. This raised the price of transportation and thus the price of practically everything in the US market. Dick Nixon made a effort to save us from inflation in 74 by imposing wage and price controls when the CPI hit a then unheard 4.4% YOY increase, but in spite of his efforts the Consumer Price Index (CPI) kept increasing. After NIXON resigned FORD came in with the WIN program (Whip inflation Now) but inflation rose until the end of the decade in a non-stop fashion.
Right now we import about 60% of our oil (even worse than 73) and since 98 the price of crude has gone up from $8 to $32. The CPI is going to go up in the next few months that's for sure. Already it is up 2.1% YOY. GDP is coming out hitting 3-4%. The CRB is roaring upward and its not just the energies, but food components too. FED MZM money growth numbers are soaring at fantastic 19% per annum
rates while they have the FF rate set at an astonishing low level of 1%.
BONDS are collapsing as the twin towers of the titanic trade and budget deficits are breaking under the floor that supports them. $1 Trillion in yearly needs.
From 68-82 the DOW market traded flat with frequent panic moves downward. It stayed in a 800-1000 range after a crash
in 73-74. I figure we get one more crash down like 73-74,
and repeat the loop of 800-1000 on the SnP for YEARS TO COME.
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