The Fake Richness

Yesterday's CPI (Consumer Price Index) number in US pointed what everyone was warning in recent months...US is aproacching a deflationary season (like Japan in the 90's). The inflation data it's the lowest since the 50's. Yesterday, the FED bought another 8bn of their Treasuries following the QE2 plans. But even with the support of uncle Sam (see article from Warren Buffet supporting the measures taken by the FED http://www.nytimes.com/2010/11/17/opinion/17buffett.html) it doesn't seem that US is waking up from recession...


I bet, this will be the trendline until the end of the year and beggining of 2011. The Dollar will keep devaluating against the Yen / Eur / GBP.

Which will be good to rebuild the appetite of investors in the Stock Market.
In recent weeks we have seen a very bullish stock... See below the Nasdaq evolution since September:

I think it will continue in this mood until the end of the year... with some in and outs from the investors, getting some profits for their portfolio as it happened in 8th and 10th of November trying to break the resistance at 2,580.

But from a critical point of view, is this 22% really an increase of wealthness??? For sure not, what is really creating is a "false richness/wealth" trying to encourage consumption, recover confidence, increase the exports and make them more competitive (thanks to a weak Dollar and ultimately a better Trade Balance) to give the spark for US Economy engine.