Yes, it's an unambiguous positive. But in terms of its overall importance, it's only marginal.
If rates keep going higher, that will pose some problems to sizeable chunks of the stock market, particularly financials and other areas that are interest-rate sensitive.
Are we going to break up or down? It's hard to say at this point. What is becoming clear is that buying volatility may not be a bad thing.
Cash levels are very low. The bullish case is to say that money-market fund levels are very high, which means that investors have the wherewithal to rotate back into equities. My take on that is I wouldn't hold my breath.
We could talk about sunspots, we could talk about fiscal year-end effects, but whatever the explanation may be, history is on the side of the fourth quarter being a good one.
That would be a positive. Some of the world's excess capacity would be ameliorated.
Whether retail money is going to rotate back into the market in a huge way is the key. My guess is it's not going to happen.
The story is clearest in the natural resource area. They import a lot from resource-rich countries like Brazil and Chile. It's no mistake that those are two of the top five performing markets in the world this year.
There is a risk that if China liberalizes the foreign exchange system when the banks need to be recapitalized, there could be trauma in the system. My impression is that the Chinese are going to be as gradual as they can.
In that environment, it's only natural to expect the switch from labor into technology.