The Fed didn't raise rates and is highly unlikely to do so before the
election. The economic indicators that came out last week all pointed in
the direction of slowing economy. The concensus is that the economy is
cooling off a bit. Since we can't worry about the Fed raising rates for at
least a few months, where should we focus our high anxiety?
My vote is oil. Several local utility spokesmen recently told Minnesota
Public Radio that home heating bills might well go up 25-40% this winter.
My neighbors on utility "monthly budget plans" are squawking over this
year's sharp upward adjustments.
Where to point the blame? Saudi Arabia. They promised to increase
production sharply to get oil prices well below $30/bbl. They haven't
delivered much volume, and prices are stuck well above $30. The problem is
politics: they don't like the pressure Washington has been putting on
Yassir Arafat and the Palestinians in the peace talks. If politics, rather
than the marketplace, plays a role in oil prices, it could get ugly out
there.
