Stocks pulled back today on lighter trading volume. The Dow was off 218 points to close at 24,189 over concerns about possible military action in Syria. Both the BTS and IBD indicators remain on the sidelines. Congrats to Jonathan at BTS whose wife had a baby girl! Maybe someday this “young one” will join a Boy Scout troop in the Boston area and go on hikes in the Adirondacks.
Oil prices are moving higher as tensions in the Middle East involving Syria’s latest atrocity could pit western nations against Russia and the Assad regime. While global economic growth is solid and pushing oil demand higher, production in the US and rising output from Russia are holding price gains somewhat in check. WTI crude hit a 3 year high today bubbling up 2% to $66.82 per barrel.
Inflation in the US seems to be accelerating. Core CPI is now up 2.1% over the past year but in recent months the annual growth rate has moved up to 2.6% over the past six months and 2.9% over the past three months. If the Core CPI does hit the 2.6% level it will be the fastest inflation rate since 2008.
Core Producer prices are moving up as well and are now at a 2.7% annual rate. Producer prices were up 0.3% in March thanks to rising healthcare costs, machinery and food, which is a non-core item. The inflation data and producer price data give the Federal Reserve the green light to raise interest rates 3 more times this year. LOOK OUT 3% (on the 10 year)……HERE WE COME!