In early January of 2013, I spied an indy gas outletin my neighborhood selling Regular Unleaded gas @ $2.85 per gallon. Today as I drove around, the cheapest same quality, same grade gasoline was selling @ $3.55 per gallon. That ain't creepin,' that be LEAPIN'.
In today's grocery store circulars, one of our supermarkets had the temerity to advertize Fresh Chelean sea bass @ $26 per pound! Who is paying that price for fish?
How do we read the tea leaves and prepare for whatever is going to shake the markets? Inflation takes hold, a correction could be in order. On the other hand, that resistance in the Dow-Jones 14,050 range is penetrable. Any opinions from the experienced investors who post on this message board?
Methinks the sequestration and spending and debt and deficits ain't going away anytime soon. Our POTUS H is out there, but Congress may be an immoveable obstacle. Benny BOOM-BOOM Bernanke and his crew are still very accommodative, but how long is that going to go on. Beware The Ides of March, comrades. All IMHO.
Microeconomic theory provides that when interest rates are lowered, people who borrow pay less for debt service and thereby have more money available to spend. In the USA, when people have more money to spend, it burns holes in their pockets and they go out and SPEND. Consumer spending improves the economy as the amount and velocity of purchases creates demand. As demand increases, supply may be scarce and that scarcity means too much money is chasing too few goods & services, so the supplier of those goods and services can charge higher prices for those goods and services, thereby increasing inflation rates.
When the Federal Reserves deliberately keeps interest rates low to stimulate spending and economic growth, balloons its balance sheet, prints more money, and promotes deficits and debt--- everything is going in the same direction with no counter-balances except that the financial wizards, the business comptrollers, and some rich elites are hoarding cash.
Something has to give. The market is dependent upon investors seeking yields from dividend-paying equities because Bernanke has shrunk yield from "safe" debt instruments. A bubble she is building. All IMHO.