Mar

14

Stand By Me, from James Tar

March 14, 2007 |

 Movies are an excellent compliment to exercise, helping to reduce the ill effects of market abuse. When in doubt, hit the weights and treadmill, then follow up with a movie. My recent bullishness is well documented; it will not change. Without question I was bludgeoned yesterday, yet I did not capitulate today.

Last night, after a fairly intense workout I got home and popped in the film, "Stand By Me." It offers several good lessons on life and friendship, but mainly shows how devout comradely is generally the best weapon against outsized adversity. Such should always be the case when market enthusiasts, Bulls, are up against a much larger opposition.

To me, by taking a big step back and looking at this year and comparing it to May-July of 2006, the same story is revealed: Liquidity.

Last year, with inflationary pressures rising faster than the market's ability to price in further global central banker tightening policy, the market finally got the cue with the May CPI and PPI releases. We know what happened after that.

This year, liquidity is coming into question in a different form — under the perception that a huge component of the US economy is severely damaged. Is it really that huge? My estimation of the sub-prime component says something different.


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