I was looking at the inflation numbers that just came out (because that’s the kind of thing I do for fun) and noted a couple of things. The housing index, for a market which all the great economic prognosticators assure us is in a “bubble”, increase four-tenths of one percent in July. The energy index increased five-tenths of one percent in July. Housing markets were driven by low interest rates and continued improvements in disposable income, both of which would rationally result in higher prices. Energy markets were driven by: reports that oil production will exceed use by several million barrels by the end of the decade, the topping off of the US SPR which will mean an extra 1-200,000 barrels a day available to the market in September, the end of sanctions against oil producer Libya, mixed results from Iraq that include security improvements in the north and south where oil is shipped, as expected a stable transfer of power in Saudi Arabia. Certainly not all news in energy markets is negative (for prices) but it’s at most a mixed bag. Housing markets on the other hand have no reason to fall with long term interest rates stable, foreclosure rates stable and consumer income up. So what market is in a “bubble”?