Inflation or deflation ?
Mish posted his opinion on this today. Check it out here.
Here is an extract (emphasis are mine):
"Credit marked to market is going to continue to plunge, and plunge at a faster rate than any stimulus from Obama or any swap-o-rama tactics by the Fed. In my book that is deflation. You might not be able to see it as the Fed will allow banks to hide the destruction of credit in level 3 assets or off the books in SIVs, but pretending something is worth more than it is does not make it so.
The Fed at some point will resort to out and out monetization, and that will have the inflationists screaming at the top of their lungs. However, banks will still be reluctant to lend, and consumers and businesses will be reluctant to borrow."
Mish has been very good in his macroeconomics forecasts ever since I started reading his posts almost 2 years ago.
And again this post makes a lot of sense to me.
Stock market forecast
Also, his forecast on the stock market:
"I am sticking with a thesis that says we are currently in a sucker rally in the stock market that will end soon after inauguration or moments after Obama signs a new stimulus package. My target is 600 on the S&P but 450 is not out of the question. However, it is better to think of this in ranges and that range would roughly be 450-700."
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