Inflation Is Coming!
By Chuck Butler
Good day… And a Marvelous Monday to you! It’s not a Marvelous Monday for the currencies, stocks, commodities, the Miami Heat, or my beloved Cardinals… Of course, those two teams will get through their rough patches… But the risk assets… Talk about getting slammed on Friday… Whoa! That was one nasty move, and so, here we are on this Marvelous Monday sifting through the ashes of risk assets that got burned on Friday.
So… Is it over? The selling that came fast and furious on Friday? I guess the only thing that stopped the selling on Friday was simply time ran out on the trading day, and with it being a Friday, there was no Asian market to pick up where the US left off… So… Saturday and Sunday brought out the calmer heads in Asia, and the risk assets of currencies and metals found a bid… Not a strong bid, but enough to wrap a tourniquet around the bleeding…
So… What caused this selling? Well, you can go back and lay the price graph over the time line, and see that precisely at 7:30 (CDT) the selling began… So… What happened at that time? Strange as it might seem, it was the import prices data that stirred the selling drink. Apparently, in May, import prices surged, as the Import Price Index showed a 12.5% increase! Now… You and I are not falling for Fed Chairman, Big Ben Bernanke’s belief that inflation is only “transitory”… But, apparently, the markets did… For when they saw that 12.5% increase, they went bonkers! Inflation! Inflation! Sort of like, “The Russians are coming! The Russians are coming!”