Reply #52: Today's Pfenning - Inflation Risks Diminishing? [View All]

[54anickel]

http://www.kitcocasey.com/displayArticle.php?id=1227

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About 9 AM Central Time yesterday morning, a note flashed across my screen from a trader friend that was very closely following the Bernanke economic update... He said... "Bernanke says inflation risks diminish"... I was shocked! I quickly looked over to the currency trading screens, and the euro was taking off for a flight over 1.31! It had already booked a 1/2-cent gain on the disappointing Retail Sales number, but that move had nothing on this jump over the 1.31 fence!

So... Big Ben thinks inflation risks have diminished, or are diminishing... GIVE ME A BREAK! Is there a new report that the markets are privy to that Big Ben perused before giving his testimony? Are tea leaves involved? How about tarot cards? ( I think that's what they are called.) Anyway, you get the picture... So, now we have a Fed chairman that just makes stuff up? GREAT! NOT! Big Ben went on to say some other stuff... But nothing that moved the markets like a "inflation risks diminish" statement!

He's fallen into a trap... The oil/energy trap... His counterpart over at the European Central Bank (ECB) hasn't fallen into this trap, he fully recognizes that the price of oil was temporarily weaker... He also, like me, recognizes the "powder keg" in the Middle East that could set off oil prices going to $100 at any time...

Oh well... I think Big Ben was simply setting us up for a rate cut this summer, if not before... It's my opinion that the Fed isn't anywhere near to being "out of the woods" with regards to inflation... But, then I don't use tea leaves or tarot cards!

OK... So euro owners thank you, Mr. Bernanke...

Overnight, Japan posted a much better than expected 4.8% GDP for the 4th QTR... OK... I'm not going to sit here and say "I told you so," no wait, I just did! I told you that Japan's economy was kicking tail and taking names later, and the Bank of Japan should have raised rates at either of the last two meetings. That 4.8% growth rate is the fastest quarter of growth in over 3 years! This isn't Australia... This isn't Germany... This is the 2nd-largest economy in the world, growing at 4.8%! Yes, Virginia, there is global growth... And all the other central banks around the world have done what they needed to do to keep inflation from entering into the picture, except... The Bank of Japan!

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