Commodities Surge / Oil Over $100
A: Oil settles over $100/barrel & Gold trades up 2% & Platinum reaches new record. Nah, there is no inflation! Cut away Big Ben, stocks need another hit!
At some point, corporate profits will either take a serious hit on rising costs OR they will pass on the expense to their consumers. Yet, we keep being told inflation is moderating!
With the credit crunch posing serious risks to economic growth, our federal reserve has chosen growth over inflation as its mandate and with every rate cut we will most likely see:
* higher oil prices
* higher gold and other precious metal prices
* higher commodity inflation in pipeline
* short term 'high' for stocks
* weakening US dollar
When this credit storm passes and economic growth stabilizes, expect the fed to quickly take back a bunch of these rate cuts in an effort to curb runaway inflation. Housing deflation + commodity inflation is not a good situation make!
