Fed Minute Impacts
Well, just as I suggested in my Saturday post, it's turning out to be a quite an interesting week. The main issue impacting markets today was the release of minutes from the March 27 & 28 Fed meeting. The info released suggests that the Fed may be very close to ending short-term rate hikes. This news impacted nearly everything:
The US Dollar closed at the lowest level in 7 months against Euro
The DOW soared 195 points
Gold closed at new 25 year high ($623.30)
Silver broke $14oz in the world spot market
Oil Traded above $71
Once the Fed Rate hikes are stopped (too soon?), I believe we will continue to see significant declines in the US Dollar and overall higher long-term rates (due to lack of dollar buyers). I also believe we are on our way to 80+ dollar oil (based on technical indicators alone) and my previous prediction of $3.00 gas this summer was probably far too low... If we (1) bomb Iran, or (2) experience more hurricane disruptions in the Gulf this year, it's quite possible we'll see $100 + Oil & $4.00 + gas...
With that said, all those Petro Dollars we spend to keep our SUV's humming will (1) pull much needed money from our already strapped consumer pockets--increasing mortgage, auto, credit card and other defaults while reducing US GDP--70% of which is based on consumer spending, (2) will add to our already massive trade deficits and decline of the Dollar's purchasing power, and (3) will add to foreign dollar holdings & subsequently their US purchasing power--allowing them to increase the rate of buying away our country's infrastructure--the slow death of America.
Also, I would like to state in the coming months it's quite possible we'll reach new all-time heights in the DOW, but once the economy begins to sour (before the end of this year), I think we'll see MAJOR corrections take place throughout the markets. This eye opening experience will nip irrational exuberance in the rear and will spark the beginning of the great 2007 + Recession/Stagflation.
I'd really like to spend more time on this, but have other pressing obligations.
Good evening to all