Steeny, let us take a look at your points:
1.Core CPI(EXCLUDES ENERGY) was up much stronger than expected.
That was due to the jump of oil from $11/barrell to $18. I don't see that going any higher since world demand for oil is not going up with Asia and Europe still " on the watch list ". USA alone will not increase oil prices.
2. Unemployment is the same, but Asia is no longer on the brink, LTCM behind us.Wages grew slightly faster than expected. The internet is no doubt helping, but does the Fed buy this?
Important: with rising interest rates Asia is not on the brink but remains on the warmer. Japan is still in the Intensive Care Unit. Without it the Pacific Rim cannot crawl out of the hole.
3. NAPM came out much stronger than expected, indicating that today's unemployment # will be revised upward.
Remains to be seen. But I am not worried. When I hear that Oracle will boost earnings by cutting down 1 bill from overhead I know what that means: more layoffs.
4. The home sale #s and new home prices came out much greater than expected.
Not worried. Home sales are always high in spring. ( that's why I got my last mortgage Dec 15, gg. Nobody looks for houses Xmas eve VBG.)
People also thought interest rates might go higher and so they tried to lock in rates.
5. GDP seems to be growing faster than the yield curve, indicating inflation.I don't have the data in front of me, but I'll get it soon.
With the Fed not printing money like before and slightly higher rates and the stock market down I think that will naturally pull the GDP back a little. Just where it should be.
There are great reasons not to raise, but I just think the hawks want the 25 bps back. That might be the end of it. Perceptions that 25bps is not the end is causing the lack of conviction.
The Fed does not want to raise rates and tank Asia, Japan, Russia etc.
The market has already done that for them,
TA
You said:
I also don't see serious inflation long-term. The Fed has indicated that they see
troubling signs. They count.
1.Core CPI(EXCLUDES ENERGY) was up much stronger than expected.
2. Unemployment is the same, but Asia is no longer on the brink, LTCM behind us.
Wages grew slightly faster than expected. The internet is no doubt helping, but does
the Fed buy this?
3. NAPM came out much stronger than expected, indicating that today's
unemployment # will be revised upward.
4. The home sale #s and new home prices came out much greater than expected.
5. GDP seems to be growing fater than the yield curve, indicating inflation.I don't
have the data in front of me, but I'll get it soon.
There are great reasons not to raise, but I just think the hawks want the 25 bps
back. That might be the end of it. Perceptions that 25bps is not the end is causing
the lack of conviction. |
