During a client review this week, an astute client asked me about specific inflation numbers including a reasonable forecast for the short term ahead. 2016 inflation was reported to be 2.1%. This rate included a recovery in oil and metals prices.
This week’s continued decline in oil prices to about $42 per barrel represents a decline of over 20% from the recent peak. Energy deflation will therefore be a factor in the next few inflation reports.
Concurrently, the 13 week Treasury bill interest fell to below .95% despite the overnight bank lending rate being raised to a 1% base. The 30 Year US Treasury yield dropped as well to 2.73%. The bond markets are, in fact, moving against Fed rate increases. The meaning is likely that the Federal Reserve’s hands are tied from further short term rate increases this year by the bond market building in deflation factors.
Oil
Courtesy of Bloomberg LP
Alerian MLP Index
Courtesy of Bloomberg LP
Dow Jones Index
Courtesy of Bloomberg LP
Nasdaq Index
Courtesy of Bloomberg LP
Headline Round Up!
*Pension Crisis Update: Hey GE Shareholders Can You Spare an Extra $31 Billion?
*Southwest Airlines New All Time High on Drop in Oil Prices!
*Qatar Wants to Buy 10% of American Airlines Just Weeks After Trump Calls Them Out for Terrorism.
*Buyer Beware: CCC Distressed Debt Record Issuance.
*Existing Home Sales Increase to Near Record Levels!
*The Oil Smackdown Accelerated BEFORE the Petroleum Status Report! Did information leak out of the barrel?
*Energy Companies Downgraded on Oil Decline.
*Tequila! George Clooney’s Casamigos Brand Fetches Over $1 Billion from Diageo.
*Amazon Rules Retail: Nike to Sell on Amazon, Foot Locker and Dick’s Sporting Goods Slammed as Retail Ice Age Continues.
*Black Gold Rush: 5,946 Wells Drilled and Awaiting Completion!
*$30 Billion Potentially Freed for Bank Shareholders Due to Deregulation.
*Biotech Spikes on Trump Softening: Up About 5% in a Week.
Profit Report!
When could energy related companies bottom?
What did Warren Buffet teach us this week about fixed income and equity strategy?
What lessons are we learning from current investor perspectives?
S&P envy? What is it? Why is it dangerous? Hint: everyone wants S&P performance when it is up, but not when it declines.
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