The latest example of the weakness in the US economy came Friday with the anemic September jobs number as well as downward revisions to prior months.
Equities and Treasuries moved accordingly knowing that the report was so weak, that there will be no rate rise this year. Stocks soared as bond buying took the 10-year US note below 2 percent.
Global markets rejoiced as the dollar weakened. The strong greenback is the bane of the global economy. The amount of price increases around the globe is creating runaway inflation in Asia, South America and the third world countries.
This is the backdrop we have that has Fed chair Janet Yellen jawboning about raising rates. The move would certainly help the banks but it would also weaken the dollar to curb the inflationary pain globally.
The problem arises in the US as there is a price deflation fear on strong dollar as well. The fact that there is little to no wage growth for most middle class workers. With that dynamic of no pay rise, inflation is never going to happen here.