Brahmason's Blog

Bernanke says rates likely staying on hold till 2014 .

Taylor says events might and will most probably justify , the need for earlier rates rise because the U.S. should be bound for healthy growth after last quarter GDP 3 % increase .

If we consider employment figures with problems to stay above 200 .000 through 250.000 jobs per month ( a figure signing real recovery must be close to 280.000 jobs on a steady basis and better if jobs are in industrial areas indicating better average salary ) , the trend of housing with foreclosures at 25 % increase with housing above 1.000.000 $ currently involved and mortgage rates decreasing to a fixed 3.9 % , while sales per year remain 45 % below what a real healthy market would require , plus fiscal deficit proving too difficult to level and external deficit also lingering despite dollar rate being considered weak by american themselves , do not , but do not allow optimistic attitudes .
Outlook canot be but grim .

However rates may have to be increased sooner than expected because of costs inflation burst due to persistently growing petrol prices .

Under present circumstances core inflation could come below 50 % of total inflation laying a more difficult path to recovery while demanding higher rates to minimize stagflation –

The critical point in our opinion is placed in a petrol price around 6 $ / gallon as far as U.S. economy is concerned .

Will petrol reach that price ? Yes we have no doubts whatsoever –

Brahmason