The last five economic recessions were all preceded by a spike in crude oil prices. Does that mean we should worry about yesterday’s historic jump in the price of oil? In a word, no.
Article Category: Inflation
I want to start off today with a chart that shows exactly why you shouldn’t trust most economists – at least those with ulterior motives. This chart also helps demonstrate the importance of crowd psychology across both the financial markets and the broader economy.
Mr. Powell and the Fed continue to claim that their actions are data-dependent, but the question is beginning to arise: What data are they dependent on? The fact that many Fed officials have referred to this as an “insurance cut,” almost by definition suggests that fundamental economic data doesn’t justify a move lower.
As you most likely know, last Friday’s strong jobs report – which showed 224,000 jobs created in June – has caused a bit of unease across the market. With investors now salivating over the prospect of a rate cut, robust economic data has come to be viewed with disdain. After all, who wants a strong economy when we can have asset-price juicing stimulus instead?
We’re going to mix things up this week and begin our discussion with gold, which has finally broken out to the upside from a multi-year consolidation pattern. As you can see in the weekly chart below, gold has climbed above long-term resistance near 1375, and completed a bullish breakout of its ascending triangle pattern.