World Glut 2006*

Somebody told me that markets, on average, drop seven times (7x) faster than it takes to rise.  This year we're close : from Dec 31 to now, markets have risen and given back near everything  in 3 weeks, since 18 May.

The entire western world along with Japan have been the leading "producers" of easy money the  last 4-5 years after the dot.com blowout. In the simplest of terms, monetary investment  will expand to fill the amount of liquidity alloted to it. That is to say, the recent run up  in many sectors and markets have been feeding on the "easy" money which has been injected  into world economies over the last years...

Our estimation of this from January this year was that by Q4/2006 the FFR (baseline Fed interest  rate) would be 5.25 or 5.5% (2 more 25bp hikes). We are sticking by this figure.

Randolph Buss

http://www.safehaven.com/article-5375.htm

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