Alternative Path

[gdl]

With manufacturing activity surging well above expectations and prices also rising much higher with the added jobs report the notion that the FED wants to STIMULATE is INSANE! But we know the real reason the street is anxious for a rate cut. They fear long term damage due to bowwows and lenders long standing practice of assuming disinflation would create profits for everyone. The exact opposite will happen if it doesn't reverse soon. The other reason is competition. The street doesn't want any. The slow crawling buildup to a possible breakout inflation event is still going on with no sign of a major change just yet. Slow and steady.

The longer we remain at these rates with a strong economy the more likely the policy shifts. The mistake would be to lower rates this year and i believe the FED would do just that. The subsequent spike in inflation would be dramatic if they do appease the investor.