ALONG THE WAY

 

Story has it back in my younger days as a cub reporter when if you have to write one more obit page or another story about a church bazaar you think you'll vomit, I was assigned  to cover one of those political gatherings where the top politician's smarmy  PR guy tries to wiggle his candidate's way into your byline via the libation route.

 In the medical profession it's called liver rounds.

The top dog was a Congressman whose name shall remain as anonymous now as it was then. It wasn't as if he didn't have some clout 'cause he did. He was just a glad handing phony with a knack for delivering the Washington bacon to the home crowd. He loved it and so did they. Re-election every two years sealed.

My mother raised us to always be kind to old dogs, children and, whenever possible, drink watermelon wine. Besides being an an aphrodisiac, it soothes the urinary tract. So knocking back a few, no problem.

Hang around politicians and bureaucrats long enough and you soon can read them out loud like one of those classic children's books. Pretty much that's what they are. Self-centered, ego-driven, immature kids running around in adult bodies. Oh, and I almost forgot about temper tantrums when things don't go as planned or someone asks the right question at the wrong time.

On this particular occasion there were some rumors floating around about some land in the sticks that a big federal government project was set to plow its way through the middle of and two of its largest owners were guess who? If you say the Congressman and his PR guy you're gonna ruin the story.

Ikea the big Swedish retailer steps up to the minimum wage plate, announcing what amounts to a 17 % hike in wages set to kick in next year. The huge retailers has 36 stores in the U.S. and says its raise is based on a living-wage calculator that includes such items as housing, food, transportation and medical costs. There's even a provision for taxes.

Many analysts believe that wages are the critical shoe in all this inflation talk. If wages rise and firms can make the expected price hikes that usually follow stick, it'll be off to the races time again. So Fed Chair Janet Yellen with her noise comment may prove more prophetic than anyone thinks.

With any surprises it might someday rival another Fed Chairman's now infamous comment about irrational exuberance. For Yellen's sake one only hopes that unlike the former this one wasn't plagiarized.

And, too, Ikea is not alone in raising minimum wages. The lists is growing..

One of the things we enjoy reading is statements like this one that appears in this week's Barron's: "With no recession on the horizon, there's little need to fret about the bull market's imminent demise Strong economic gains, however, don't always lead to big stock gains."

Correct on both accounts. Inflation is what we're talking about. And inflation can be somewhat good for stocks, but it can also send pocket-book-rattling shivers up the spine of shaky investors that are needed to drive stock prices higher. If the Fed turns out to be wrong--and we believe they already are--it won't say much for their so-called vote of confidence.

There's another term here you see little mention of, though we've espied a few--stagflation. Now you can burn the midnight petrol checking out all the data of the pros and cons apologists will cite to prove their points of view if you want. And that could bring up a really big question bureaucrats and politicians never want to hear:                      

 "Who in the hell is in charge anyway?"

Get caught up in the exercise at your own peril. Just be aware it hasn't made the rounds in a while and like the man said:  "What goes about comes about."   

Earlier today Federal Reserve of St. Louis President James Bullard, though a non-votng member, added some fuel to the debate by saying he thought the market was correct in looking past the dismal 1Q report "amid other signs that the economy is improving."

Speaking on the Fox News program "Sunday Morning Futures," Bullard added "... he expected that the economy would grow at around 3% for the rest of the year, and that unemployment would fall below 6% in the second half. He also said that the Fed’s preferred measure of inflation could approach its 2% target by year-end" 

The economy is in better shape than most realize, Bullard contended:  “Both financial markets and the public at large doesn’t realize how close we are to normal, compared with postwar history.” 

Should he turn out to be correct, the water filled balloon known as global markets will definitely bulge somewhere. Figure that out ahead of time and you'll save yourself a lot of unnecessary pain. And if you're lucky enough you might make some serious money along the way.

Until next time, that's the way the story has it.