Another week down and I mean that literally.
The various indexes and averages have moved down for over a month.
We keep touching levels that indicate a correction and move below support levels.
So far we have been able to bounce off these low levels.
The problem is that there is so much to overcome.
This week, the Federal Reserve will meet and raise rates.
There seems to be a feeling that the increase will only be one quarter percent.
That seems pointless with last week’s news that inflation was close to 8%. It does not take a college education to understand that getting nothing on your savings when inflation is that high is not going to work out well.
It hasn’t helped that much of the news about inflation is due to the rise in energy costs.
It is no fun to head to fuel your car and have to pay $4 per gallon. It would be nice if we could all ride a bike to work, but that of course isn’t going to happen.
You then have Ukraine.
It’s reasonable to isolate Russia, but there will be a price.
We import way more minerals from Russia that are essential to many of the most green energy saving projects.
Ukraine is the bread basket of Europe. As in all things this is a zero sum game.
For everything that is done there is a consequence that results in a loss for someone else.
At least there are some who are coming out and avoiding political implications and stating the obvious that the amount of economic stimulus is the real reason for inflation.
Moreover, there is a huge price to pay for all the stimulus debt this country has taken upon itself. It seems that no matter what party, increased taxes are coming.
For all the talk about raising wages, which is happening, the rise in prices we pay for anything and everything is not leaving anyone ahead of the curve.
As if all that wasn’t enough bad news, we are now hearing the word recession being mentioned as a real possibility later this year.
It seems counter intuitive as you have to look at how low unemployment has become and the earnings reports are nothing if not spectacular.
The one real problem though is that the stock market is priced for perfection.
It will take little or nothing to turn this around and headed south. This is what happens when you get too far over the tips of your skis.
It was a part of the introduction to the Wide World of Sports with a ski jumper falling and crashing off the side of the ski jump. It was the agony of defeat.
You push too far and you can really feel the pain.
Time will tell but I am not sure there are any real great alternatives.
