Seems the latest buzz when I turn on the national news is the (once again) rising cost of gasoline. Some states are already seeing prices above $4/gallon and forecasts are calling for prices to exceed the $5/gal mark for some states by summer. Quite the quandary for Washington with this being an election year and all. It is common knowledge that the Fed continues to actively pursue a policy (unwritten but very clear by their actions) of a weak-dollar that started with QE1, then QE2, and now continues with Operation Twist.
So far, so good as the stock market continues to rise, as expected, with the falling dollar. Therein lies the rub: Keep flooding the banks with liquidity to keep improving their garbage balance sheets and continue to allow them to gun the stock markets for the profits using free money (tax-payer money printed out of thin air) but watch oil prices continue to rise not only because oil is still priced throughout the world in US dollars, but also because the banks will create and fuel any bubble they can to milk profits (remember the nearly $150/bbl oil bubble caused by the same exact players back before it popped in 2008?…how quickly we forget). -OR- Does the Fed pull the plug on the money printing machines to stop adding fuel to the fire and appease Washington so everyone’s happy come election time? If so, dollar up = oil down but also stock market down.
So what’s it going to be? Continued debasement of the US Dollar and flooding the banks with free investment capital or ease up on the punch bowl of free money while gas, food and other necessities continue to hit an already bruised and battered consumer in the wallet… especially as they prepare to go to the polls? Again, these are just fundamental ramblings of which I try to keep to a minimum here as fundamentals just don’t offer good entry or exits points on trade….charts do.