1982 déjà vu all over again

It is beginning to appear that my original prognostication that 2006 was more like 1982 is appearing truer by the moment. The market continues to signal that a pause in rate increases looks to lead equities higher and maybe the catalyst that this market is looking for in the long run to re-ignite the bull market.

First we had a 2 quarter rally which came to an end with the appointment of the new FED chair and the muddled transition from the Greenspan era. The continued outlook that the end of the FED rate increases was nowhere to be seen dampened the enthusiasm for equities, to say the least. Meaning that while the public has lost its appetite for equities the big players seeing lots of value are on a buying binge. This year like 1982 the amount of buyout, merger and take over activity is at an all time high while enormous amounts of cash are sitting on the sidelines in the hands of institutional investors, companies and hedge funds. In 1982 volatility began to increase and volume moved up in parabolic fashion. Be warned that this is only the beginning for the volatility increase and as the new bull starts to charge the ups and downs will start to increase in greater regularity.


Why will the FED finally stop, because summer vacation time will give the economy a much needed vacation coupled with action in the mid east and maybe its just enough to cause the FED to pause for the sake of liquidly and stability. What’s been very noticeable is that all the sectors that should be rallying in an inflationary slow growth environment are flat to down while some that like lower rates and stronger growth like specialty retail, savings banks and shipping stocks are rallying higher.