|
Yes this is typical of the devil, lurks does the damage and disappears.
The devil I am talking of here is oil. Oil in a relative sense is going no-where short term but has already done the damage. But the devil has also had devil helpers in the form of raw materials and labour. All of these have pushed inflation up world wide. In Zimbabwe it now takes a Billion dollar note to buy a loaf of bread - if you can find a loaf - although that country has its own set of inflation problems. But don’t laugh, in history some of today’s modern nations have had laughable inflation levels.
We knew inflation would get out of control and we smarty economists told you so a long time ago. But in fairness to you, inflation is insidious – whilst we are enjoying the party the inflation demons are at work and by the time the party is over it looks like a rampant virus and carriers out of control. Like a virus it takes a good time to get it under control.
But our boys behind the Reserve Bank Bus are experienced fighters and are doing a sterling job despite fears of political or consumer pressure. They like such buses and will do what it takes to get us there.
But back to oil and a chart for oil as I cant live without my charts:
click chart for more detail
Most oil charts show an ABC pattern suggesting we will see some range trading. But I have found one chart – a 30 week that differs and this shows a possible scenario of maybe a little lower first and then a move up to $160.
A pullback to sub $120 a barrel may be heaven sent but in a relative sent it is very high and we still have to live in fear of such freakish levels as $160. The only saving grace is that there is some time before that will happen – 2009 – and we know anything can happen before then.
Enjoy the ride
Tom Scollon
Chief Analyst
|