I just Keep Thinking
I keep thinking about the Fed meeting and what the minutes will say. The minutes will have to speak to a more tough stance toward inflation, and they will either lie and say the underlining economy is moving well or blame the recent flooding in the mid-west for economic softness.
Either way, rates will have to go up as inflation is too out of control, while the economy is soft. A reaction to this anticipation will be a weaker market (generally speaking), stronger dollar and lower commodity prices.
The more I keep thinking about the current economic situation, the more I like the short trade on the USO. (Even Globally… India is now faced with 11% inflation. China will see a huge inflation jump because they removed the subsidies on gas. China just put an 18% tax on their consumers. Anyone that does not think the price hike will not have an impact is simply kidding themselves.) Global inflation can no longer be ignored. Rates globally will have to rise somewhat or continue being innovative in how they handle inflation (like china’s gas hike). If not, the central banks are being careless.
(I would say to short the SPY, but it is really oversold and I do not like shorting when something is too oversold despite my approx. 1280 price target. We should see some intermediate, techincal, bounces coming soon in the market.)
