Tuesday, February 17, 2015

The world according to Snarkolpesy.

When I read articles about the Fed raising rates I laugh and laugh and laugh. This is a complete fantasy and I will tell you why.

1. Rates have ticked up over the last two weeks or so. They were pretty solidly in the 3.50-ish range for a few weeks. Now rates are doing funny things. The aggregate now is about 3.80-ish, but every now and then you get these wild swings of banks asking for rates in the 8%-ish range.

Last week this caused refi's to cave 10%. Mortgage apps to cave 7%. Here. I expect a pretty bad housing number this week, If rates keep ticking up - refi's are absolutely dead.

2. The dollar will continue to strengthen because the rest of the world is having a really tough time due to the collapse in oil prices. "India catching deflation fever." China has started to slash prices due to deflation pressure. Canada .... on man Canada... I feel for you - homes sales are down roughly 40%  YOY I read this morning and people are starting to panic. These are all large economies.

3. The strength of the dollar will make oil prices go yet lower. Rinse, wash, repeat.

Last week about 10% of the articles I read said oil was going to 10 bucks a barrel. Which I thought was plausible. Everyone has to pump more oil now to make the same amount of money. Today, 90% of the articles I read said oil was going to 10 bucks a barrel. I don't know where it is going, but simple math tells me lower.

4. Retails sales are barely over stall speed. You might as well call it a stall.

With the whole world pretty much in deflation now, how exactly does the US think it's going to get enough inflation to raise rates?

Another fascinating thing not really related to this article is - usually this time of year companies start to shed their worker build up from Christmas. They have yet to start doing that which is unusual considering the really horrible retails sales over the Christmas season.


  1. Well there are apparently a lot of strikes going on, ports, refineries, and land shipping (in canada). Someone mentioned it could have something to do with TPP thing the corporations (tptb) want passed. It sounds ridiculous but who knows anymore...

  2. It is odd there are so many unions getting lippy right now. If I have time tomorrow I will have to see if they all belong to the mother union so they all have to strike.

    Maybe it's now or never?