Too Much Money Chasing After Too Few Goods

It is tough to think of a more blinking red light about another surge higher in inflation than the fallout from the ongoing tensions in the Red Sea than the major supply disruptions, as seen on a recent CNBC.com headline, below. 

On this options expiration Friday, stocks (especially tech, notably semiconductors, again) are ignoring any bad news and pushing higher yet, even with the small caps in the IWM red. However, rates are higher on the 10-Year, perhaps a nod to the Red Sea issues pertaining to inflation. 

Headed into next week, with a plethora of major earnings coming into focus, followed by the January 31st FOMC, the inflation issue will be critical insofar as whether a March rate cut is still on the table or not. If the Red Sea tensions linger, it is tough to see even this Fed cutting rates with obvious supply chain issues coming to light.