Fed Rate Increases Not Near Done - Inflation is Here Now.

March releases from the Bureau of Labor Statistics (BLS) www.bls.gov show that inflation is here.  At 3.4% year over year and a March monthly rate of 0.6% (that’s 7.2% annualized) inflation is really going now and we are not near the last interest rate increase in this series by the Fed.  I think there are many more to come.  There may be a pause in the steady stream of rate increases but the fact is that if this Fed pays attention to inflation, rate rises have to continue.

Take a look this list of data that my friend Jordi Visser sent me today about asset prices since the March 28^th  FOMC (Federal Open Market Committee)   meeting: 

- Silver +35%,

- Copper + 50%,

- Gold +25%,

- Gas +11%,

- Crude oil +9%,

- Nominal GDP 4th highest in last 16 years,

- Manufacturing data much higher than expected,

- Non manufacturing data higher than expected,

- China GDP grows at a rate of 10.2%- the second fastest since 1996,

- Dollar has worst monthly performance since September 2003 and has continued this month.

I just do not see how Chairman Bernanke’s FOMC can ignore these facts at tomorrow’s meeting and stop raising rates at this or the next meeting.  Could a larger increase of 0.5% be in the cards for this or the next meeting?  A jolt like that certainly would put the market on alert that this Fed Chairman is serious about fighting inflation.

Disclosure:

I am short ten year (ZNU6)  not and long bond (ZBU6) treasury futures. I am long yen/short USD. I am long British Pounds. I am long gold coins. I am long gas futures. I am long Silver US Eagle coins.  I am long inflation indexed bonds. I am long intermediate term muni bonds.  I am long US large cap stocks that I believe can pass on price increases to customers and will do well in an inflationary environment.