Consolidation Tuesday ?

Markets will likely consolidate today and early tomorrow in anticipation of Wednesday PM's Fed announcement. That's fine. More stock needs to move into stronger hands for the next big move up.

Babblevision and Bloomberg keep talking about "decoupling", viz. the world economic growth "decoupling" from the US consumer and complete dependence on US economic growth as a driving force. I think it's happening. For a few years I've written about the creation of a "Asian Co-Prosperity Sphere" using the old propaganda name of the WW II era Japanese empire as a subtle joke. This does seem to be happening, but Russia, Eastern Europe, the Persian Gulf and Brazil are part of it, too.

The question in my mind for over a year has been whether the world economy could continue to grow as the US trade deficit was reduced. The US trade deficit has been pumping the world money supply with dollars that are used as bank reserves for all those growing nations. With reserve growth, they can expand their own money supplies and grow. As the US trade deficit really does seem to be shrinking, this question moves from the virtual thought phase [a geddanken experiment] to reality.

The world needs other monetary reserves to keep expanding as net US dollars flowing to the world are reduced. So far it seems the Euro is stepping up. That's a start. I'll keep studying this development and the trends. I think for the very long term examining the pressures on the world money supply as the conjoncture* of economic growth and long term stock market gains is crucial.

Word of the Day:
*Conjoncture: this is a French word that is moving into English and is not even in the Oxford English Dictionary yet so I can't value it yet.

"Conjoncture" was originally coined by the famous historian Fernand Braudel to describe the second tier of forces that drive history. By "second tier" the definition means not the kings, dukes, religions and wars that so often seem to dominate writing about the causes of historical events, but measures of the economic sphere of the "common man" that seem to explain major trends in history.

From "Europe: A History" by Norman Davies, page 425, "conjoncture" is a term of economic structuralists meaning "the foundation onto which all other historical facts are to be fitted." The example in that book was the trend and changes in Paris rents during the Middle Ages and later. A modern example might be the money supply. The book, "A Monetary History of the United States" that I've written about before uses the US money supply as the conjoncture for US economic growth and cycles, panics and depressions.

PS: I have sheep herding class today ... uh ... I mean that I am taking Sky & Krypto to sheep herding classes today ;-) I'll be out from about 8AM to 1PM EDT.