In normal times (whatever those were), rising oil prices and interest rates would be a cause for worry. Oh for the early ‘80s when the Hollywood actor became president and there was a USSR trying to tame Afghanistan and Paul Volcker targeted bank reserves!
In these fascinating days, hikes in energy prices and bond yields should be welcome. The not so hidden agenda of the controlling authorities is to inflate away debt and worry about the consequences later. Krugman and others insist that inflation Cassandras are false prophets and that deflation is the enemy. They may well be right, but Kev thinks the Nobelist and his ilk are betting as wrongly as Kev did on baseball this past week.
Though rates dropped after spiking earlier last week, they can only go up this year. If they don’t, then the Obama presidency will be a failure because it will mean the problem that was thrust upon it – restarting economic activity – has not been solved. Fiscal and monetary captains will not turn off the spigots until the prices of goods, services and money go up. Lock in a mortgage now if you have a job.
And jobs data will be key this week. ADP will report corporate layoffs on Wednesday, and the Labor Department will tell us on Friday how many more lined up at the soup kitchen in May. Any negative number below 550,000 will be greeted with cheers in the equity market.
But there are no normal times. They have never existed. What’s good for General Motors is good for the USA? It has taken Kev, because it’s all about him, well into his later years, to realize his expectation that eventually all secrets would be revealed was a mirage. Yet, we still court Miss Market. We can do no less. Finer minds than Kev’s summon her. Be nimble, be quick, and believe in God or not, but take your time on putts.
Still in with PALM, F, AMD, and looking to get back into DXO. Get out of government bonds while the getting is good.
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