Saturday, May 05, 2007

Next Fed Move will be up, not down! Inflation not quelled yet.

After an extended break to see my brother get married in Los Angeles, including a visit down to Sea World and Disneyland, some time away for training, and just a general break, the Confused Capitalist is back.

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The Confused Capitalist has been busy reading the tea leaves, as well as a very interesting book on the process of "intuitive" thinking, and in the Blink of an eye, realized that the Fed will have to move interest rates up, rather than down.

Inflation is not yet quashed, and inflation around the world also appears to be moving towards the upside. A declining US currency won't help things either, as inflation will be "imported" in addition to domestic pressures. The Fed will most likely begin to move rates up in nine to 15 months, and it won't just be 25 basis points until they stop. Where they will stop, I'm not certain, but it will be at least 50 basis before they pause again, but possibly as high as 200 basis points, looking out over the next 24-36 months.

Well, that's my tea leaves reading for this quarter. These days sure feel like the 1970s in many ways.


The Confused Capitalist