KOLD - Federal Spending Limits May Soon Boost This Market

• The Fed is expected to keep its key interest rate well below the inflation rate for the foreseeable future, and the U.S. budget deficit is now so large that the Fed cannot raise key interest rates much anyway, and Biden’s big spending plans may be ending soon.
• Last Tuesday, the Labor Department announced that the Consumer Price Index rose 0.3% in August - a big cooling off from the 0.5% and 0.9% increases in July and June, respectively. It also announced that import prices declined 0.3% in August, which represents the first decline in 10 months.
• Going into this week’s FOMC meeting, the cooling of these inflation numbers gives the Fed credibility regarding its “transitory inflation” prediction.
• The other big surprise last week was that the Commerce Department announced on Thursday that retail sales rose 0.7% in August, well above the economists’ consensus expectation of a 0.8% decline.

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