Loading ...Skies are clear with no chance of rain! That is what the forecast for the near term. I personally don’t agree that the market should go higher but I do agree that it will go higher, probably to 9,800 ish. The problem is that near term, I don’t see anything that can smack reality into the public of what the real economy is going to do. Peons for the most part cannot think with their own marbles and need others to tell them what the market is going to do. So they will buy high and sell low.
Here is the problem the market will face within a year.
First, all the central banks have held their hands together and printed money to the nth degree, at some point this money designed to curb deflation will land on things of real value (commodities and land). This will cause hyper inflation UNLESS they raise rates, which is exactly what they will do.
Second, companies have been beating extremely low earnings only because of dramatic cost cutting effort such as laying off 20% of work force, cutting production by 50 to 75%, and depleting inventory. Next earnings, we will start to see the reserve affect, meaning that companies will have to build inventory, restart production and maybe in a few years higher. Only problem is that now they will have to pay a higher price for those commodities used in production.
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