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"<p style=\"padding-left: 30px;\"><span style=\"font-size: medium;\"><em>Written by <a rel=\"author\" href=\"/authors/author_rel.htm?author=/home/aleta/public_html/authors/gary_.htm\"> Gary</a></em></span></p>\n<p><span style=\"font-size: medium;\"><strong>Weekend Market Commentary For 06-28-2014</strong></span></p>\n<p><span style=\"font-size: medium;\">UPDATED: 0910 EST 2014-06-28</span></p>\n<p><span style=\"font-size: medium;\">Inflation is the talk around financial circles lately and most think they have it right. Some claim that the Middle East is going to have oil production issues driving up consumer prices and ultimately inflation. Others say that US inflation pressures will accelerate if/when velocity of M2 money picks up.</span></p>\n<p><span style=\"font-size: medium;\">My feeling is that inflation will not be an important issue for the 2014 business cycle, but it will be an important talking point for many who have nothing in it except to stir the pot and upset the 'Sheeples'.</span></p>\n<p><span style=\"font-size: medium;\"> </span></p>\n<p style=\"text-align: center;\"><span style=\"font-size: medium;\"><img src=\"/images/2014/5/380_86479963Screenshot-5_23_2014,1_18_42PM.png\" alt=\"\" width=\"380\" height=\"93\" /></span></p>\n<p><span style=\"font-size: medium;\"><!--more--></span></p>\n<p><span style=\"font-size: medium;\">For one thing, the velocity of M2 money still a headwind for now as the recession plus a huge expansion in the money supply have decelerated money to its slowest pace on record.</span></p>\n<p><span style=\"font-size: medium;\"><img src=\"https://research.stlouisfed.org/fred2/series/M2V\" alt=\"\" width=\"525\" /></span></p>\n<p><span style=\"font-size: medium;\"><a rel=\"nofollow\" href=\"https://research.stlouisfed.org/fred2/series/M2V\"><img src=\"/images/2014/6/38072468Screenshot-6_28_2014,8_57_06AM.png\" alt=\"\" width=\"535\" /></a></span></p>\n<p><span style=\"font-size: medium;\">Even higher oil prices will hit drivers this summer, but that too is unlikely to impact growth (CPI) as any loss of export will be corrected pronto according to Cliff Wachtel.</span></p>\n<p><span style=\"font-size: medium;\"><img src=\"http://www.macrotrends.net/1373/oil-prices-vs-the-cpi-historical-chart\" alt=\"\" width=\"525\" /></span></p>\n<p><span style=\"font-size: medium;\"><a rel=\"nofollow\" href=\"http://www.macrotrends.net/1373/oil-prices-vs-the-cpi-historical-chart\"><img src=\"/images/2014/6/61532840Macrotrends.org_Oil_Prices_vs_the_CPI_Historical_Chart.png\" alt=\"\" width=\"535\" /></a></span></p>\n<p><span style=\"font-size: medium;\">Inflation is a monetary phenomenon under the control of a currency's central bank and the Fed WILL do anything necessary to control inflation and according Ms. Yellen, she is not at all concerned.</span></p>\n<p><span style=\"font-size: medium;\">According to Wikipedia:</span></p>\n<p><span style=\"font-size: medium;\"> </span></p>\n<blockquote><em>\"In <a rel=\"nofollow\" href=\"http://en.wikipedia.org/wiki/Economics\">economics</a>, the <strong>money supply</strong> or <strong>money stock</strong>, is the total amount of <a rel=\"nofollow\" href=\"http://en.wikipedia.org/wiki/Money\">monetary assets</a> available in an <a rel=\"nofollow\" href=\"http://en.wikipedia.org/wiki/Economy\">economy</a> at a specific time. There are several ways to define \"money,\" but standard measures usually include <a rel=\"nofollow\" href=\"http://en.wikipedia.org/wiki/Currency\">currency</a> in circulation and <a rel=\"nofollow\" href=\"http://en.wikipedia.org/wiki/Demand_deposits\">demand deposits</a> (depositors' easily accessed assets on the books of financial institutions). It is easy to confuse the amount of spending money in the economy with the amount of money in the economy.\"</em></blockquote>\n<p><span style=\"font-size: medium;\"> </span></p>\n<p><span style=\"font-size: medium;\">Cliff Wachtel writes in his article below that yes there will consumer price increases in the short term, but that they are unlikely to change Fed Chair Yellen mind on Fed Policy.</span></p>\n<blockquote><em>\n<p><span style=\"font-size: medium;\"><a rel=\"nofollow\" href=\"http://seekingalpha.com/article/2281223-oil-gold-inflation-connecting-the-dots\"><strong>Oil, Gold, Inflation: Connecting The Dots</strong></a></span></p>\n<ul>\n<li><span style=\"font-size: medium;\">\n<p><span style=\"font-size: medium;\">Higher oil prices will soon be felt on the consumer level, though it's unlikely they'll impact growth yet. If fighting in Iraq even threatens the southern region, however, there is a chance of much higher prices. That said, whoever is in charge will want oil exports restored ASAP.</span></p>\n</span></li>\n<li><span style=\"font-size: medium;\">\n<p><span style=\"font-size: medium;\">Oil and gold are moving in sync, probably reflecting concerns about currency values or coming inflation as that is the primary driver of gold.</span></p>\n</span></li>\n<li><span style=\"font-size: medium;\">\n<p><span style=\"font-size: medium;\">Rising short term inflation is unlikely to influence Fed policy. Even if inflation does establish a long term uptrend, inflation is only one factor that in Fed policy considerations. It could well tolerate higher inflation if it believes low rates continue to support job growth.</span></p>\n</span></li>\n</ul>\n</em></blockquote>\n<p><span style=\"font-size: medium;\">Paulo Santos admits that \"the signs that there's looming inflation aren't yet very strong\" still thinks that all this printing of money is the main factor in driving the markets upwards and inflation is probably the main roadblock towards the rally continuing and I would agree.</span></p>\n<p><span style=\"font-size: medium;\"><a rel=\"nofollow\" href=\"http://seekingalpha.com/article/2282273-inflation-is-rearing-its-ugly-head\"><strong></strong></a></span></p>\n<blockquote><em>\n<p><span style=\"font-size: medium;\"><a rel=\"nofollow\" href=\"http://seekingalpha.com/article/2282273-inflation-is-rearing-its-ugly-head\"><strong>Inflation Is Rearing Its Ugly Head</strong></a></span></p>\n<h4>Summary</h4>\n<ul>\n<li><span style=\"font-size: medium;\">\n<p><span style=\"font-size: medium;\">There are some signs inflation is showing up, after years of money printing.</span></p>\n</span></li>\n<li><span style=\"font-size: medium;\">\n<p><span style=\"font-size: medium;\">This is happening both in the U.S. and globally.</span></p>\n</span></li>\n<li><span style=\"font-size: medium;\">\n<p><span style=\"font-size: medium;\">With money printing being the main factor driving markets upward, inflation is probably the main roadblock towards the rally continuing.</span></p>\n</span></li>\n</ul>\n<p><span style=\"font-size: medium;\"><strong><a rel=\"nofollow\" href=\"http://seekingalpha.com/article/2282273-inflation-is-rearing-its-ugly-head\">Read More &gt;&gt;</a></strong></span></p>\n</em></blockquote>\n<p><span style=\"font-size: medium;\">Kevin Flynn feels that the stock market is overvalued and any recent Geo-political scares only ends up fueling the markets to move higher. Inflation is a worry that may or may not be valid and the outcome is certainly not 'preordained' without a fight from Mr. Market.</span></p>\n<blockquote><em>\n<p><span style=\"font-size: medium;\"><a rel=\"nofollow noopener\" href=\"http://email.seekingalpha.com/track?type=click&amp;mailingid=20140627&amp;messageid=authors_alerts&amp;databaseid=&amp;serial=authors_alertsO20140627O.f9c378539b02fe319a30706f49bade39.1403869871&amp;emailid=gary.chris%40comcast.net&amp;userid=557124&amp;extra=&amp;&amp;&amp;3000&amp;&amp;&amp;http://seekingalpha.com/article/2288113-inflation-growth-and-the-stock-market?source=email_authors_alerts&amp;ifp=0\" target=\"_blank\"><strong>Inflation, Growth And The Stock Market</strong></a><strong> </strong></span></p>\n<p><span style=\"font-size: medium;\">I would suggest the following conclusions: one, that without further supply shocks, inflation will not get traction in the current business cycle. This is in large part due to two, general inflation will continue to be constrained by diminished purchasing power, low real wage growth, and moderate economic growth overall. While we will surely see some better quarters for growth rates than the last one, including its cyclical opposite, the economy is unlikely to move from five years of low growth to five years of higher growth without interruption or significant change in the current economic structure.</span></p>\n<p><span style=\"font-size: medium;\">Three, until the next credit contraction comes to pass, asset inflation will continue in select areas, including high-end real estate, collectibles, fine art, and equities. Though the recent low in stock market volatility will not last, one should expect a transition period of occasional outbursts rather than a sudden discontinuity (though geo-politics can change this).</span></p>\n<p><span style=\"font-size: medium;\">Finally, the real threat for the end of the current cycle resides not so much in interest rates rising to still-low levels, but that asset inflation continues to widen the divergence between select price levels, particularly equities, and the general price level dictated by the real economy. Should the business cycle reach a natural end at a time when asset prices - encouraged by the usual failures of global worries to morph into global disasters - have climbed back to historically maximal deviations from the mean, their return to the mean (and typically beyond) is far more likely to cause the credit system disaster that the stock market and central banks fear, than would a modest increase in the level of real rates.</span></p>\n</em></blockquote>\n<p><span style=\"font-size: medium;\">Basically, all this talk of inflation moving the markets is just talk and inflation is at least not a near term event. But what it does imply is that the markets are facing a headwind because of it.</span></p>\n<blockquote><em>\n<h4><a rel=\"nofollow\" href=\"http://seekingalpha.com/article/2280953-inflation-fears-and-the-fed\"><strong>Inflation Fears And The Fed</strong></a></h4>\n<ul>\n<li><span style=\"font-size: medium;\">\n<p><span style=\"font-size: medium;\">Last week's Consumer Price Index (CPI) release spooked a few people with a month to month change of 0.4%, the largest since February 2013.</span></p>\n</span></li>\n<li><span style=\"font-size: medium;\">\n<p><span style=\"font-size: medium;\">The Fed chair, Janet Yellen, is far less concerned about inflation and less worried about last week's CPI report than most.</span></p>\n</span></li>\n<li><span style=\"font-size: medium;\">\n<p><span style=\"font-size: medium;\">Other inflation measures do not point to a jump, or even a modest rising trend, in inflation.</span></p>\n</span></li>\n<li><span style=\"font-size: medium;\">\n<p><span style=\"font-size: medium;\">What does all this mean for Fed policy? Very little. However, we are likely to hear a lot more nervous talk about inflation during the summer.</span></p>\n</span></li>\n</ul>\n<h4><a rel=\"nofollow\" href=\"http://seekingalpha.com/article/2280953-inflation-fears-and-the-fed\"><strong>Read More &gt;&gt;</strong></a></h4>\n</em></blockquote>\n<p><span style=\"font-size: medium;\"><strong>(Follow Closing Market Averages at end of this article)</strong></span></p>\n<p><span style=\"font-size: medium;\"> </span></p>\n<p><span style=\"font-size: medium;\"><strong>WTI</strong> oil closed Friday at <strong>105.75 </strong>(down -0.10 or -0.09%)</span></p>\n<p><span style=\"font-size: medium;\"> </span></p>\n<p><span style=\"font-size: medium;\"><strong>Brent</strong> oil closed Friday at <strong>113.21 </strong>(even 0.00 or 0.00%)</span></p>\n<p><span style=\"font-size: medium;\"> </span></p>\n<p><span style=\"font-size: medium;\"><strong>Copper</strong> closed Friday at 3.164<strong> </strong>(down -0.009 or -0.27%)</span></p>\n<p><span style=\"font-size: medium;\"> </span></p>\n<p><span style=\"font-size: medium;\"><a name=\"OBJ_PREFIX_DWT1305_com_zimbra_url\"></a> <strong><a rel=\"nofollow noopener\" href=\"http://email.seekingalpha.com/track?type=click&amp;mailingid=20140531&amp;messageid=macro_view&amp;databaseid=&amp;serial=macro_viewO20140531O.7043e5dd7855e01ac595986e9bd61d13.1401538520&amp;emailid=gary.chris%40comcast.net&amp;userid=557124&amp;extra=&amp;&amp;&amp;3000&amp;&amp;&amp;http://seekingalpha.com/article/2246913-the-demon-the-gold-bears-are-mistakenly-overlooking?source=email_macro_view_gol_pre_met_0_8&amp;ifp=0\" target=\"_blank\">The Demon The Gold Bears Are Mistakenly Overlooking</a></strong></span></p>\n<p><span style=\"font-size: medium;\"> </span></p>\n<p><span style=\"font-size: medium;\"><strong>Gold</strong> closed Friday at <strong>1316.90</strong> (down -0.10 or -0.01%)</span></p>\n<p><span style=\"font-size: medium;\"> </span></p>\n<p><span style=\"font-size: medium;\"><strong>If you would like to get advanced buy/sell tweets, sign-up in the column to the right of this post by clicking on the '</strong><strong><a rel=\"nofollow\" href=\"https://twitter.com/Econ_Markets\"><strong>Follow</strong></a></strong><strong>' button. Write me with suggestions and I promise not to bite.</strong></span></p>\n<p><span style=\"font-size: medium;\"><strong>Friday's Market Numbers</strong></span></p>\n<p><iframe src=\"http://eqrates.investing.com/index.php?pairs_ids=277;347;6408;243;282;346;396;238;284;247;240;260;241;271;316;352;6974;7888;26490;8193;308;6369;280;301;251;8082;267;8177;287;272;252;334;8115;409;402;305;651;295;474;469;333;667;7997;7992;&amp;header-text-color=%23FFFFFF&amp;curr-name-color=%230059b0&amp;inner-text-color=%23000000&amp;green-text-color=%232A8215&amp;green-background=%23B7F4C2&amp;red-text-color=%23DC0001&amp;red-background=%23FFE2E2&amp;inner-border-color=%23CBCBCB&amp;border-color=%23cbcbcb&amp;bg1=%23F6F6F6&amp;bg2=%23ffffff&amp;last_update=hide\" width=\"600\" height=\"960\" frameborder=\"0\" scrolling=\"no\"></iframe></p>\n<div style=\"width: 559px;\"><span><span style=\"font-size: 11px;color: #333333;text-decoration: none;\">Leading Stock Quotes powered by <a class=\"underline_link\" style=\"font-size: 11px;color: #06529D; font-weight: bold;\" rel=\"nofollow noopener\" href=\"http://www.investing.com/\" target=\"_blank\">Investing.com</a></span></span></div>\n<p><span style=\"font-size: medium;\">To contact me with questions, comments or constructive criticism is always encouraged and appreciated:</span></p>\n<p><span style=\"font-size: medium;\"><a name=\"OBJ_PREFIX_DWT211\"></a><a name=\"OBJ_PREFIX_DWT32\"></a> <strong><a rel=\"nofollow\" href=\"mailto:gary@econintersect.com\">gary@econintersect.com</a></strong></span></p>\n<p><strong><span style=\"font-family: arial,helvetica,sans-serif;\"><span style=\"font-size: medium;\">Written by <a href=\"/gary.htm\">Gary</a></span></span></strong></p>\n<p><span style=\"font-size: medium;\"> </span></p>\n<p></p>\n<p><iframe src=\"/authors/author.htm?author=/home/aleta/public_html/authors/gary_.htm\" width=\"600\" height=\"500\" frameborder=\"0\" scrolling=\"no\"></iframe></p>"
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