Inflationary credit crunch? (mannfm11)

Inflationary credit crunch?	mannfm11	NEW 12/14/2007 3:56:41 PM
Thebulls have a real puzzle. They are getting their no recession for thetime being, but the Fed is probably going to have to reverse course orat least not lower any more until they see a recession. Something tellsme the numbers are being cooked, but then again, if they have beencooking inflation numbers for so long, why would the uncook them themonth the bulls are shedding please help me Fed tears. Usbears also have a puzzle. Do we win if growth keeps up? Or is the realmess up in the output figures? Are the output figures nominal insteadof real? If the output numbers are correct, then the employment numbersare somewhat correct. But, the debt numbers are also correct and thedebt numbers along with the credit crunch numbers spell future bearsuccess. One thing I am trying to figure out is if the marketshave turned trend. I think this is a good question on this board andthere is a lot of opinions and no confirmation. The bears aren'tgetting this market to lower numbers and I don't care about anythingbut seeing a lower number. We are still making higher lows (I am not aclose guy, but an interday guy on this number). Until we turn down,shorting rallies is going to be dangerous. A side ways market is acontinuation pattern. This is not that big a top though. Thediamond top on the Dow back in 1999-2001 was about 2 years wide. Thereis nothing here to compare to that, was we have been probing the 13,500to 14,000 area for only 6 months and the dead air between 12,600 and14,000 for about a year. This isn't much more than the consolidation ofthe 7500 to 9200 area between the summer of 97 and the fall of 98, anarea that served later as support for the 2002 bottom. Mybearishness has always dwelt on valuation and credit. PE's of 16 to 17are high, not low. Dividends in the under 2% range on the SPX, and nextto zero in the Nasdaq are miniscule. Debt on a ratio of GDP, GNP orwhatever phony economic measure they have (it seems that creditcreation is counted as GDP in this country, as is medical care that isinflated 500% over real value), is out of sight. The trade and budgetdeficits are merely symptoms and not causes of these other messes. Thething has got to break down. We might come out of this withthe rally that kills every bear left but a few perma bears like me. Ithink it happened in the first half of 1929, a doubling of the marketduring a period of insanity. Buying stock in this kind of atmosphere islike playing golf in a hail storm. Not being on the golf course, asanything can happen after a round starts, but teeing off with hail thesize of your golf ball (might be a good way to cheat, kind of like theGDP figures). The greatest temptation in finance is to be afortune teller. I love to be one myself, but being wrong will make evena fortune teller skeptical of his own opinions. That is why I'm alwaysbearish, as I am eventually going to be right. The problem once I amright is going to be when to switch my opinion. I doubt the marketmakes a bottom at a 2% dividend this time or a 50 PE in the SPX. Ithink the bulls are going to buy this mess all they way down and atsome point us bears are going to have to join them. But, where will itbe? I would venture that the relatively strong companies with growthprospects paying 5% or higher dividends are going to pay off. Onething for sure. The next bull won't have the stars this one had. Lookat the stars of the last bull, GE, MSFT, INTC, CSCO, DELL, the dotcoms,telecom and pharma. How many of those stocks are going this time? Thistime it is AAPL and GOOG and the material stocks. I suspect the nextwave will be an entirely new group, with maybe some of these old namesback in vogue. So I will stay here with my pal Ras and bashthe bulls, regardless of what happens. I hate to be praying for badnews, but you know sometimes it isn't so bad seeing an idiot get runover jaywalking. We have a problem here and I think it is calledunfunded bank credit liabilities. The Fed has come up with this auctionidea and I wonder what part of the public domain they are selling togive to these insolvent bastards. Something tells me they are lookingfor a sucker and it might produce a suckers rally.