Monday, October 25, 2010

Everything is heading to the moon (except us).

First, a little sad commentary on the trajectory of the US. While sitting in a planetarium yesterday with my oldest daughter, we were pondering the size of the Andromeda galaxy when we started talking about the end of the US space shuttle program. I mentioned how we'd still be going into space just on Russian rockets to which my daughter responded "I guess if you want to be an astronaut you'll have to learn Russian."

It's stunning to me that the country that won the race to the moon has been reduced to outsourcing our leaps forward in just 2 short generations.

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Markets are heading back up on the back of a weaker dollar. The talk on Wall Street seems to be that the Fed could have to inject up to $4 TRILLION in it's next round of easing in order to jack up the economy. I'm not convinced that this will work to save the economy, but that is the plan so you need to be prepared for it.

The biggest impact however, will likely be on your wallet. Remember two weeks ago when the government said there would be no cost of living adjustments for Social Security recipients because prices aren't rising? Oops. It seems that prices are rising just in "volatile" items like food and energy. Consider these price moves SINCE LAST NIGHT :

Oil, up 1%.
Wheat, up 1.49%.
Corn, up 2.05%.
Soy, up 1.5%.
Rough Rice, up 1.51%.
Oats, up a stunning 4.27%
Cotton is lock-limit up 5%

As long as you don't have to eat, drive, heat your house or buy clothes you should be fine. Again, these aren't annual price increases, that is what happened to those commodities in the last 6 hours!!

Remember the equation: Fed easing = Lower US Dollar = Higher Stock Prices = Higher prices for everything you buy.

The only thing that could hurt this plan is the market's expectation that the FED is going to come into the market in a huge way next week (up to $4 Trillion). What happens if they ease into the market with "just" $100 billion? The "sell the news" event could be substantial (however, for the conspiracy theorists out there, note that event will occur after the elections next week).

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I'll offer up this story without commentary - the key to a long lasting marriage appears to be ignorance of you spouses likes and dislikes.

"Long-lasting marriages may thrive on love, compromise and increasing ignorance about one another. Couples married for an average of 40 years know less about one another’s food, movie and kitchen-design preferences than do partners who have been married or in committed relationships for a year or two, a new study finds."

Okay, I promised no commentary, but I actually think that this is pretty easy to explain. Newlyweds haven't changed their tastes. If you're a 25 year old couple that likes cheesy romantic comedies, you'll still like them a year later. However a 68 year old couple probably has seen their tastes evolve so that one person might be into science fiction while his wife might have found an appreciate for dark, sarcastic comedies.

Cheers!

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