Randall Forsyth at Barron’s says Lindsay Lohan’s tweet about high prices and money printing is a sure contrary sign that stocks are ready to roar ahead, along with the dollar. The financial columnist claims not to know of LiLo writing, “I’d never even heard of her until she sued E*Trade (ticker: ETFC) for one of the online broker’s popular baby ads that referred to ‘that milk-aholic Lindsay.’”
Whatever you say.
Forsyth figures that Washington is going to get its budget house in order and the Fed has lost its appetite for Treasuries. According to Forsyth, LiLo’s tweets,
mark the top tick, as it were, of the concern about monetary and fiscal profligacy.
After all, they came as the Federal Reserve was winding down QE2 — the purchase of $600 billion of Treasury securities. So, the Fed has stopped “printing money,” to use Lohan’s locution. As for her observation on the currency market, the U.S. Dollar Index has stabilized around the 75 level since the QE2 approached its final destination last month.
Subsequent to writing his piece, the rough, tough, tea-partiers bagged the idea of cutting $4 billion from the budget, and are now shooting for half that.
Plus, Bloomberg reports that the Fed will still be the biggest buyer of Treasuries after QE2 is over.
Robert Prechter’s latest The Elliott Wave Financial Forecast also took notice of the LiLo tweet.
Of course, Lohan’s endorsement at the behest of an association dedicated to the proposition of runaway prices is another sign of the end of the line for inflation, just as stories about Barbra Streisand’s stock picking in late 1999 marked the end of a big bull market in equities.
The Elliott Wave guys see deflation around the corner taking stocks and everything else to the woodshed.
The M2 money supply has increased from $2.643 trillion the week of July 7, 1986 to $9.112 trillion the week prior to LiLo’s 25th birthday on July 2nd.
Sure, Washington and the Fed may discover restraint. So might LiLo.
History would say otherwise.