PPI this morning has reached 6.5% year over year, and stock index futures are plunging as a result. Gold and crude oil are consequently rising modestly, as this stocks the fears of greater inflation ahead.
T. Boone Pickens, the famous Texas oilman who, six months ago, predicted that the price of oil would go down temporarily until the summer, has reversed his prediction. On CNBC earlier this morning, he predicted that oil would reach $150/barrel this year. Remember that Goldman Sachs last week predicted $141 oil this summer. He bases his prediction on that fact that the world is consuming 87 million barrels of oil a day, and the world supply is only 85 million barrels. He said that demand decay is beginning to occur due to the cost, and that the balance of the supply shortfall is coming from inventories.
