We wanted to repeat our thoughts from June 17. FOR NOW, WE BELIEVE INFLATION HAS PEAKED!

For now, we believe inflation is in the midst of peaking BUT FROM VERY HIGH LEVELS. This is not saying much considering how high inflation is but any price drop, especially energy is of import. OIL stocks have topped also. Not sure it is for the right reasons but we believe for now, inflation is peaking. Not sure how much it will come down but we think a softening economy softens demand…thus…

Inflation remains ridiculously elevated and will need to come down a ton. But all one has to do is see a chart of copper, iron, steel, lumber for starters to see what we are talking about. Energy prices are now on pullback and if the pullback sticks, will go further in cementing a high for now. Keep in mind, any pullback in inflation is because of how high inflation had become and a back up because of a recession is not such great news but certainly at the pump, maybe some relief to come. 

You can now add wheat, corn, soybeans and cotton to the commodities that also have looked to put in tops of varying degrees. This also goes hand in hand with rates pulling back. So while everyone is still talking up inflation, oil prices have now gone from the $120s and now headed towards $100. Just as the president wants a gas tax holiday, if price just stays where it is this morning, expect a 40-50 cent drop at the pump in the next 2 weeks.

If commodities have indeed topped (at least for now) what is it saying?

We believe we are already in recession. Our channel checks are showing demand heading south in many ways. But we believe in the Reagan thought on recessions. If your neighbor loses their job, it is a recession. If you lose your job, it is a depression.

What will this mean for the easy money, money printing, bubble making fed?

We think it should take some pressure off them. Simple as that. Lower prices for commodities and lower rates should provide them some relief. Whether or not they recognize it is another story as they have been wrong on everything so far.

The important point is that for whatever reason, if price just stays here, energy relief is on the way based on market forces and not silly government intervention. We know this is the commodity market and we also know Russia is still doing its thing. Price will be everything. Right now, price is finally cooperating and that is good news for average Americans. If price changes back to the upside, we will let you know.


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