Economic Comment: Interest Rates

Is nobody listening? The U.S. recorded a 2% inflation hike last MONTH! That's not 2% per year - we're talking about a MONTH. Let me do the math ... that's 24% inflation equivalent per year!! Surely this is anomalous or an error ...

When short rates breach the 5% barrier on the upside, we will be looking at an entirely new interest rate scenario, not seen since the 1980's.

I'm glad I don't have a variable rate mortgage to deal with.

Blog Frequency Comment

I have suspended efforts to keep my Blog up-to-date in all areas, due to obvious lack of interest. Six billion on the planet and not a single reader on the WORLD WIDE WEB. So much for the INTERNET miracle.

I have decided that for now I will write individual Blog updates on newsworthy developments as I see them emerge. It's been fun. Thanks for dropping in.

Oil U.S. Light Sweet Crude ($62.87)

I started talking about $60 as an important support area for Oil back in September, and since then I have described Oil as hanging on by its teeth in the $60 area.

On November 19th I reluctantly stepped to the sidelines out of concern for the need to eventually complete a short term correction in an intermediate term uptrend. We are still attempting to climb a short term "B" wave.

MY DILEMMA: I see senior oil producer shares as the only group that is anywhere near the support side of its intermediate term uptrend, while most other groups appear to be slowly rolling past short term tops. (Most groups are in intermediate term uptrends, just like oil.)

MY SOLUTION: I have recently said I would park funds in senior oils while awaiting the short term general market cool down.

Interest Rates

For some weeks now, my forecast calling for higher interest rates has been at odds with the prevailing view that rates will head lower in the months ahead.

My work has consistently indicated that rates at the short end could ultimately surge upward, producing a yield curve shock that would have the potential to take us into a situation not seen since the 80's.

Until this morning, all street chatter from top to bottom, offered me no encouragement to assume that my views regarding the prospect of higher rates were shared in the financial community.

Today, the ECB is reported to have hiked rates by 25 basis points to 3.5 percent. Is it a crack in the dike? Will the pundits come around to my point of view?