Whew, what a week!
On Friday the 2nd, an economic report came out stating that wages were increasing. That surely was good news for the market… or was it?
Higher wages mean the economy is reaching full employment, which means that in order to hire an employee, you need to lure him away from his current job at a higher salary. This translates into higher expenses for employers, and less profits. If the employer wants to make up for the shortfall, he needs to raise prices. And that, my friends, is called inflation. Inf-what? of course, we haven’t had any inflation for a long time, and all of the sudden, it hits us: It was there, all along, never left, only waiting patiently in the sidelines. Continue reading