As much as I enjoy reading Richard Russell anyone would understand he sits by a desk and sees things one way and writes about it. Armchair analyst.
Doesn't mean he is right. Over the years he has been about 50/50, which is a terrible record of course. Rather be closer to 100% right or 100% wrong.
I know he was bearish equities when the market was going up and up....suddenly he turned bullish saying something remarkable is happening, all indices around the world are going up together. The last bear turned bullish and the market started to fall.
Look at housing in the US, equities, the dollar..I reckon the deflation has already happened and is close to finishing. USD is rallying which will bring down inflation. Inflation in the USA is pathetically low if you strip out energy. But hang on, oil is dropping. All good.
Fannie Mae, Freddie Mac, many financials and so on have dropped 70% or more. Our market has dropped 30%+ from highs. More than average bear markets. Either we are moving into a mega bear market, i.e. IT bubble crash, or we are churning around the bottom at the moment before heading higher. Hmm, earnings results haven't been bad at all here. Are bears getting trapped?
If you buy a house in the US now you could say it may drop another 10% (or maybe it's the bottom) but in 5-10 years time you should be well ahead. Hence maybe a good time to start buying a house in the USA.
Sharemarkets are wonderful, they are a discounting mechanism. More bad news should come out but the market will rally long before the last bad news has hit the headlines.
Deflation here? Just look at the banks, Centro, Babcock and Brown, Creditcorp and so on. We are talking priced for bankruptcy.
Yes properties should fall. Way too high. Government should start building more, kickstart the basic economy of building. Money moves from property to equities. Perfect.
Don't forget China et. al is industrialising. Russell should visit China and see what is going on and not just look at charts and comment. BHP just had record profits again and more to come.
