E Market Briefing For Wednesday, Dec. 1

Stickier inflation dilutes the discretionary spending capability of consumers, and that is problematic based on both Fed policy, known unknowns that relate to the renewed 'possibly' profligate expansion of another COVID wave, and that all runs into the winding-down of tax-selling season for a stressful 2021.

Dollar, Inflation, Balloon, Ben Franklin


Today Chairman Powell himself formerly retired the word 'transitory' used too long to describe inflation. For months I've said it was 'enduring' with really no way to 'claw back' wage increases and a majority of other real cost increases. I believe inflation will prevail even if the Omicron variant spreading returns the other word to focus on: 'stagflation'. This is a persistent unresolved issue.

It is also an impetuous situation for the Fed (who didn't use the active window early this year during fairly swift growth to initiate more tapering), and for our society as a whole, which isn't keen to hear what may be premature warnings from the same 'experts' that were tardy alerting Americans to COVID last year. An orderly and 'flexible' approach to monetary policy is what's needed, rather than the spinning of intentional tapering to fit the backdrop, worrisome or not.

Confidence is a mixed-bag as people legitimately wonder whether incomes or spending power will both go in opposite (and undesirable) directions. That's a function of human nature only to a degree. How so? Because a confluence of events (Fed 'testy' hawkishness rationalized by anything related to COVID rise or decline.. because they spin the implications as discussed last night), meets the known unknown of whether Omicron 'really' is going to be widespread.

As always, the market doesn't like uncertainty, and all this lacks any clarity for sure. It creamed the Oil market too, hurt travel bookings, and makes everyone revisit anxiety of months earlier, even if some media pretend it's some game. I only can see that point of view for behaving 'as if' the old approaches are best as they also acknowledge new treatment modalities are pretty clearly needed (OIL).

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This is an excerpt from Gene Inger's Daily Briefing, which typically includes one or two videos as well as more charts and analyses. You can subscribe for  more

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