I think the folks at the Fed would like to raise the federal funds rate as high as they can short of seriously depressing economic growth. They want to make sure they have plenty of room to ease next time they have to do so.

The bigger bubble is actually in the financing of homes. Mortgage lenders have loosened their lending standards. Rather than telling a lot of would-be buyers, particularly in places like California, that they don't qualify, they're coming up with all sorts of so-called innovative alternative financing.

It's been clear that the Fed concluded rates were too low,

For two years, we've seen this tremendous increase in prices, yet the core inflation rate has stayed at 2.3 percent or less, and the only explanation for that is globalization means inflation is contained.

The bigger bubble is actually in the financing of homes.

Earnings are still going to grow as interest rates and inflation remain low.