A week ago OPEC+ (essentially, Saudi Arabia and Russia) announced a wholly unexpected cut in crude oil production and took everyone by surprise. Prices immediately jumped from $75 to $80 per barrel. Why did they do it?
I think it was a response to the new round of dollar "printing" by the Fed, engineered to salvage (once again) the US banking system. How are the two connected? Simple: crude oil is priced in dollars - when there are immediately more dollars around producers of "hard" goods are encouraged to hike their prices.
The Fed had started reducing its balance sheet (QT) - but then sharply reversed course and "printed" overnight as many dollars as it had withdrawn in the last 6 months (QE) - see chart below. And a week later... OPEC+ hiked prices. I don't know about you, but I don't believe in coincidences.
It seems to me that the negative effects of unwise money creation to the real economy are becoming ever more rapid and obvious, even to the untrained eye. From another perspective, demand for luxury goods and services by even the merely rich (not to mention the HNW and UHNW) is continuing unabated. I can speak from personal experience, observing how American tourist bookings abroad are booming, particularly in the luxury sector. There is just too much money sloshing about and it does not really matter how high interest rates go, until consumer deposit rates go significantly higher than inflation.