I have been saving my energy for my end of week blog. After I was rear-ended in the Kiss & Go line by a mini-van yesterday, I felt it prudent to cool down before I posted.
Last two posts were about inflation and what is perceived, real and mostly the great unknown. The CPI came out this week for May and it represented the largest 12 month drop in 60 years. As you can discern, there are examples of growing energy and food costs but overall there is no "inflation boogeyman" right now. So what gives?
The economy is in tough shape. The job market is still not recovering as people would have you believe. The unemployment rate is around 9.4% and rising. The housing market is not stabilizing quite yet. The media is gloming on any positive news when it comes to existing home sales to new housing starts but its a hollow strategy. The wonderful news that people would have you believe is that mortgage rates are still at historic lows. That is great if you have a FICO score in the 800s and have over 20% down. Hold tight folks on this recovery. We still have a way to go.
Let's not take my word on this inflation issue. This week two Federal Reserve governors spoke about the inflation fears. Both Janet Yellen (SF Fed pres) and Thomas Koenig (KC Fed pres) referred to it in various speeches. For my audience, the Fed presidents often speak in between FOMC meetings (these are the meetings when all the Fed people talk about interest rates and other issues) to either confirm or dispel the key issues of the Fed. Both expressed concern about the rising yields telling the story of a possibly inflationary period. The FOMC is meeting next week. The market will be focused on the minutes of those meetings and what they say.
Now that I have beat this horse for three posts, I'll leave it alone (for a bit). Stay tuned as I'll focus on what the President and the Treasury Dept are proposing in terms of additional regulation. Its very complex but I'll try to glean it down. Have a great weekend! Now onto my damaged car....
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