The rise of 7.5% inflation tops the December reading
Ten year Treasury Yield at new high of 2.028%
Lower Oil Supply Presses Market
Wall Street Journal headlines Thursday
All these items are related. The FED has continued to stoke the money supply with 20% growth in the last year. Congress has spent billions guaranteeing work shortages with producing stay at home couch potatoes. More regulation has reduced oil supplies. Current US supplies are 311 million barrels lower than in December 2020. Rather than support US producers, the White House begs OPEC to increase production.
Is Putin writing the script for Team Biden to follow? It is hard to imagine the glee Mr. Putin must be experiencing with oil prices on the rise and German closing nuclear and coal generating facilities.
Another head line reads, Russian Drill Stock Attack Fears. Now recall that a full one-half of the Russian economy rests on oil and natural gas. If we were advising on how to hike the prices what would we do? Russia’s Defense Ministry has released video of drills in Belarus. Artillery batteries are booming, jets roam the skies, and tanks are ‘rumbling across snow covered fields.’ Who needs a real fight, where a Russian solider might be injured, when streaming video gooses the price of oil just as well? What next, a Belarus stream on Hulu?
Back at the FED, Jerome and Company might raise the Fed funds rate by a half point rather than quarter in March. Let’s dispense with this nonsense that the FED is the Wizard of Oz regarding interest rates. Long term graphs of the FED funds rate versus the two-year Treasury rate show the FED lags not leads the market. Just since last September, a mere six months ago, the two-year rate has risen from .2% to 1.6%, a 8X factor! The FED will be playing catch up with the real markets the rest of 2022.
Despite all the speculation of the Russian natural gas pipeline to Germany, natural gas prices got ahead of themselves at $5.50 last week. Price has collapsed back to $3.96. It appears price will continue to fall to the previous lows under $3.75.
Finally the Democrats are planning a ‘fresh face awash in new ideas’ to speak at their mid-year convention. Yes Hillary Clinton will ascend the podium to remind us of all her past victories. She is now teaching a Master Class on Resilience.
As the Bill and Hillary comedy couple said on Saturday Night Live years ago, you’re never going to get rid of us!
