The Economy: Fed Chair Yellen appeared before Congress this week. She put on her most patient Grandma Face for the Alfred E. Neuman grandstanding of her inquisitors. Yellen acknowledged that the economic environment had become more uncertain. She mentioned falling stock and commodity prices, tightening credit conditions and uncertainty over China as causes for concern. She observed that weakness in the global economy had made life more challenging for U.S. businesses. In response to questioning she indicated that while an interest rate cut was not in the cards, 4 increases this year was still a possibility. When asked about a possible Fed move to negative interest rates, Yellen said that the Fed hadn’t determined the legality of such a move. In short, specific targets are out and Fed opacity is back in.
Food for Thought: Oil is presenting a rare opportunity. Timing is everything. There are a variety of ways to position for this. Stocks, bonds, mutual funds, exchange traded funds and notes, futures and options are examples of how to participate in the coming price rise. We believe that a pure oil play is the most effective way to capture value. Contact us if you have questions.