We have explained the linkage between an inflating Federal Reserve balance sheet; the intended consequence of that excess (fungible) reserve liquidity leaking into non-printable assets; and that energy costs (and gas prices implicitly) are the end-game 'regulator' of that excess as they crush (again and again) the hopes of multiple-expansion-based equity strategies [3]. However, even as prices of Gas surge once again towards the critical $3.80 level that has capped rallies in the last 5 years, the WSJ notes [4] that Montana and Wyoming are still seeing prices below $3.25. Of course this is all just transitory - as we are told time after time - but the reason it is reflexively transitory is simply because of the effect on all the red states in the chart below driving consumers to cutback. Transitory, yes; slow-down-inducing for sure; the only thing that stops the world's central bankers going into a printing frenzy, absolutely.
If only we all moved to Montana or Wyoming, there'd be no slowdown?
[5]
and as a reminder... why this matters...
[6]
Source: WSJ [4]