Rational Market?

So, the turmoil in Egypt is the latest reason to buy stocks? No, wait, it's inflation. High oil prices and inflation will be good for the economy.

How about this one: Construction spending fell to its lowest level since 2000. Ok, I'll give you ISM a bit above consensus expectations, 60.8 vs 58, but don't you think inflation has anything to do with that?

I love how the American Liberal press is "excited" about the events in the Middle East. Now, I'll give you that we should never have supported evil dictators over there, but do we really understand what may replace them?

Oh, the fact that the King of Jordan appointed a new Prime Minister and Parliment is no big deal, hardly worth mentioning.

Anyway, apparently Wall Street has decided that they will buy stocks no matter what, because that is their job. And, what the hell? They can borrow at nearly 0% and speculate all they want with no consequences whatsoever. If they are right, they get rich. If they are wrong, they get saved and stay rich. Incentives are a powerful thing, but eventually, profits will be squeezed
by low aggregate demand and commodity price inflation.

It is almost impossible to know when this reality will become apparent, but it will, and you won't want to be long when it does.