One expects the market to behave the way it is behaving today. After all, we are here again, the rarified air of record highs. Big money is not sure where to go from here, even with Ms. Yellen’s dovish comments to the esteemed US Congress. She says she is in no hurry to raise rates, but this does not mean anything, really. She is simply telling us inflation is not a threat at the moment and things in the US economy are going along just fine.
- New U.S. single-family home sales fell less than expected in January and supply rose to its highest level since 2010, hopeful signs for a sluggish housing market.
Heck, why raise rates when low rates help the US consumer buy a house, which is the single largest purchase for most folks, and it is the one that ripples through the economy more than any other. And heck, why raise rates when the current inflation rate is less than 2%, and, in some months, less than 1%.
So, the folks with the money hear this and think to themselves, “Well, then, when will the Fed raise rates?” The answer is when the US economy tells it to do so, meaning when inflation moves above 3%.
With crude oil now hanging around $50, the ticker for rising inflation is slowed, but with the most recent report on rising wages, it will pick up next quarter, and that will be when the breathless media begins its blathering about inevitable rising rates, and that is when the market will react. So, get ready for the end of March, because that is when the quarterly reports start coming out. If the wages data is strong, well …
In the meantime, sit back, chill, and, well, visit Colorado, Washington, and now Alaska, if you are so inclined to chill with help.
- Marijuana smokers now have a new place to put on their bucket lists: Alaska, which on Tuesday became the third state to officially OK marijuana use.
Me? I just want to stay here in my little corner of paradise, even if my little corner is experiencing a reversal in gas prices. Gasoline on the Central Coast of California has gone from $2.39 to $3.19 in less than a month. This is a bit inflationary, and it came fast. I expect it to go a bit higher before it comes down again.
Speculators are now betting on China coming out its economic doldrums and the Saudis have a full-court press going on the news cycle, so bullish money is flowing into oil.
- Brent crude oil rose above $59 a barrel on Wednesday after data showed Chinese factories were producing more than expected and Saudi Arabia’s oil minister said oil demand was growing.
Even with Brent oil nearing $60, it is not likely this will increase inflationary pressure, which means we are back to a market looking for direction. Wait a bit; it will come soon enough.
Trade in the day; invest in your life …
