Read no further than this op-ed by Ben Bernanke in the Washington Post. It tells you pretty much what the Fed wants to see happen to asset prices. While they are only publicly committed to buying long-dated Treasuries, the implication has to be that those selling the Treasuries to them are expected to shift to more risky assets. Other entities such as the Bank of Japan actually talk here about explicitly buying stocks, REITs and so forth. While the opportunities for buying pullbacks for long entry have been brief of late, one can hope there will be better ones soon.
Inflation is the notion of too much money chasing too few goods. The goods that are being chased are global equities. In my mind, that is where the inflation that the Fed so badly wants is showing up. And from there gradually into prices of goods that people actually consume- something that hit home today with a $2 increase in the price of my weekly pound of Ethiopian fancy. Foregoing that addiction for a year means I could buy that deeply discounted 55-inch TV in the pre-Black-Friday sales!
Seriously though, this act of managing prices will continue as long as possible. The path will be bumpy with periodic short covering in the dollar, vicious profit taking in commodity, momo stocks and gold and corrections in stock prices. All in the hope that eventually real demand will replace the artificial. Bears believe this involves a really long wait, bulls believe in American exceptionalism and traders just want to coin money aggressively when there is a bubble.