A 200-point rally here, a 300-pointer there, and before you know it we’re going to be reading about how the Dow Industrial Average is once again at new record highs.  We admit it, the prospect just kind of snuck up on us.  Not that we would have been the first to notice, so busy were we weeding, watering and pruning our top-ten list of economic woes, any one of which by itself could trip the country into an economic depression.  But much to our growing horror and dismay, we now observe the U.S. stock market stealing up on record highs for the umpteenth time, pulsating, throbbing and metastasizing like some demonic spore from Venus that could flourish for a thousand years on a diet of chlorine gas and beetle feces.

Getting down to hard numbers, we estimate that the Indoos will reach a minimum 13888 by week’s end or early next. This means there is yet another rally in store that will be bigger by half than yesterday’s impressive run-up, a 175-pointer that went postal in the final two hours. Based on what fabulous news, we wonder?  Someone in the Rick’s Picks chat room worried that perhaps the Dow’s 900-point surge over the last eight days might prove to have been a tad overdone if the Fed eases by no more than the expected 25 basis points. For sure, Wall Street has been acting as though it expects big things, even if the oddsmakers who trade bonds have been somewhat less sanguine.

Global Reflation

One factor that may have helped fuel yesterday’s rally was a report that the Bank of England had cut its benchmark rate by 25 basis points to 5.50%.  Our Special Friends had until recently taken a hard line on the credit crunch, but it would now appear they are less concerned about stoking inflation than about contributing, through administrative niggardliness, to a deflationary bust. So is that what this is all about: stocks going bonkers because of a global free-for-all to reinflate?  Maybe so, since nearly every bourse in Europe and Asia had risen overnight, providing the drum roll that seems to have energized the NYSE.

Far be it from us to suggest that another dollop of beetle feces will not suffice to power the Indoos above the magical 14000 barrier, so let the headlines do their worst!