Fed Ease?

Every time I hear some commentator on CNBC mention the idea that the market expects the Fed to ease rates at some point in the near future--I want to scream! I don't think the Fed has any intention of lowering rates--in fact, if inflation should become a greater concern, their next move may be to raise rates. Economic growth seems pretty good looking at forward indicators--not by looking in the rear view mirror at say GDP growth which came in pretty low.
The latest buzzword I hear about is the possibility of a "liquidity bubble". This seems plausible to me: there seems to be an awful lot of cash available for investment, mergers, takovers and the like, including the amount of leverage in the market. It's not just the U.S., it is global. A lot of liquidity chasing too few assets: that certainly raises asset prices above fair value. The thing about bubbles is, they can last quite a long time.
As far as the market goes, it does appear at least for now that the market could go higher before it goes lower. That downward "blip" we had in February was just that--a blip that had no lasting affect. At some point, we will have more of a real correction, down 8-10%, but as long as traders and managers are waiting for it and preparing for it--it probably won't happen.

Year-to-date returns as of May 11, 2007 are: the S&P500 up 6.2%, the Mid Cap 400 index is up 11.2% and the small cap index is up 7.6%. Looks pretty good so far...we'll see what comes next.