Henry Bowman
Veteran Member
It's almost like being Groucho.
You will most assuredly get paid Next Tuesday ....See Transitory
ECON BofA: "Transitory Hyperinflation Ahead"
- Thread starter marsh
- Start date
You will most assuredly get paid Next Tuesday ....See Transitory
The Hammer
Has No Life - Lives on TB
Groucho's payments are nothing if not transitory...
night driver
ESFP adrift in INTJ sea
Got a couple of issues here. The "Transitory" quote was for " HYPERINFLATION" and not simple INFLATION.
HYPERINFLATION is almost ALWAYS "transitory" since it ends. Quite suddenly. USUALLY with elaborate thunder and light-shows.
Oh and flying body parts.
HYPERINFLATION is almost ALWAYS "transitory" since it ends. Quite suddenly. USUALLY with elaborate thunder and light-shows.
Oh and flying body parts.
Groucho
Has No Life - Lives on TB
Hyper inflation? Here's an article on that. What Causes Hyperinflation
The main takeaway is that hyper inflation is a rate of 50% of inflation per month!
Here's an example as shown in this article; "Imagine the cost of food shopping going from $500 per week to $750 per week the next month, to $1,125 per week the next month and so on. If wages aren't keeping pace with inflation in an economy, the standard of living for the people goes down because they can't afford to pay for their basic needs and cost of living expenses."
Not that I'm necessarily doing it, but I would suggest laying in a really good stock of food that stores well. A year's supply isn't out of the question. Think ammo. Some of you really wish you had bought early and often. It's the same with food. Don't get left standing at the station when the train pulls out.
The main takeaway is that hyper inflation is a rate of 50% of inflation per month!
Here's an example as shown in this article; "Imagine the cost of food shopping going from $500 per week to $750 per week the next month, to $1,125 per week the next month and so on. If wages aren't keeping pace with inflation in an economy, the standard of living for the people goes down because they can't afford to pay for their basic needs and cost of living expenses."
Not that I'm necessarily doing it, but I would suggest laying in a really good stock of food that stores well. A year's supply isn't out of the question. Think ammo. Some of you really wish you had bought early and often. It's the same with food. Don't get left standing at the station when the train pulls out.
Groucho
Has No Life - Lives on TB
Groucho's payments are nothing if not transitory...
Hey hey, both of you. I've always paid Next Tuesday. If I owe either of you cash, it'll be taken care of next Tuesday.
NoDandy
Has No Life - Lives on TB
Instead of " Orange man bad " the new phrase will be " senile man bad "Very dark days are ahead, and those that are trusting Joe Biden to save America are going to be bitterly, bitterly disappointed.
TWO bitterlys. I'm not into that.
marsh
On TB every waking moment
13:07 min
Bank of America warns of HYPERINFLATION 'at the very least' | Economy Update Part 1
•May 4, 2021
Glenn Beck
Top officials at the Federal Reserve are doing what they can to sugar coat what’s ahead for our economy, telling Americans we may hit a “transitory” period of inflation that will settle by 2022. But Bank of America is saying something different...the bank’s latest earnings call commentary warned “at the very LEAST” transitory HYPER-INFLATION is ahead. Glenn explains what this means for prices and for our economy…
*****************
11:09 min
The Fed & Big Government have some 'DIRTY DEALS' | Economy Update PART 2
•May 4, 2021
Glenn Beck
Aside from hyperinflation, our economy is facing even more sinister threats. Glenn explains how the Fed has several dirty deals' with big government — concerning not only federal bonds, but US pension funds as well. These 'deals' essentially allow for The Fed to FINANCE our politicians’ huge spending, and it’s only going to get worse…
##################
13:39 min
How YOU can protect your money & prepare for troubling times | Economy Update PART 3
•May 4, 2021
Glenn Beck
So, with hyperinflation on the horizon and The Fed financing big government’s MASSIVE spending, what can YOU do to protect your money, your assets, and your family’s financial future? Glenn provides several tips for how the “average” American can prepare NOW for what’s ahead...
[May involve precious metals]
LYKURGOS
No Surrender, No Defeat!
So we install lots of reman transmissions last year we installed 12 6L80 GM reman units. A local supplier provided about 15 reman 4l65 units.
Last week I went to order the same 4l65 unit and my cost is up over $600 per unit. I ordered one GM 6l80 last week and it’s price had not changed. This week I ordered a second 6L80 and my cost was up $150 in one week. My supplier said I better call before bidding a job because the cost is rising.
An inside source says oil filters will not be available by the middle of the summer at any cost.
Make repairs and Maintenance a priority quick if you’ve been putting anything off don’t wait and all repair shops in our local area are booked for 3 weeks solid
Last week I went to order the same 4l65 unit and my cost is up over $600 per unit. I ordered one GM 6l80 last week and it’s price had not changed. This week I ordered a second 6L80 and my cost was up $150 in one week. My supplier said I better call before bidding a job because the cost is rising.
An inside source says oil filters will not be available by the middle of the summer at any cost.
Make repairs and Maintenance a priority quick if you’ve been putting anything off don’t wait and all repair shops in our local area are booked for 3 weeks solid
marsh
On TB every waking moment
Zerohedge
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com
Here Are The Companies Hiking Prices In Response To Soaring Inflation
TUESDAY, MAY 04, 2021 - 05:05 PM
Earlier today we noted that the one thing every company was obsessing during their Q1 earnings call: inflation. As BofA equity strategist Savita Subramanian calculated, mentions of “inflation” quadrupled YoY, and after last week, mentions have exploded nearly 800% YoY. More striking was her observation that as "mentions skyrocket to near record highs from 2011" these point to at the very least, “transitory hyper-inflation ahead." This is an official statement from a Big-4 bank, not some tinfoil conspiracy blog.
What is more concerning is that not only are companies talking about inflation, they are also responding to soaring input costs by hiking prices either in absolute terms or by stealth shrinkflation.
We presented an example of the latter over the weekend when we showed how Costco was masking nearly 15% inflation by selling a paper roll with 140 sheets for the same price it used to sell 160 sheets.
Of course, once companies realize they can get away with such shrinkflation - and they will because as a member of the Red Flag Deals message board pointed out...
... the obvious next step will be to no longer bother with such attempts at masking double digit inflation, and to hike prices outright until there is an actual decline in supply, or as TBT predicts, "this is the precursor to real inflation next." And sure enough, names from consumer giants from Kimberly-Clark to Clorox, Procter & Gamble, as well as food makers such as Hormel, JM Smucker, General Mills, Skippy and Hershey are already doing just that.
But don't worry, according to the Chairman, "it's transitory." Or maybe it won't be, as increasingly more banks are starting to speculate.
One thing we do know: once companies hike prices, they almost never cut them again. In fact, most companies would rather file for bankruptcy rather than reverse their pricing strategy, especially since among the most striking outcomes of Q1 earnings season are record high profit margins. Well, guess what happens to those margins as input costs continue to soar - either they collapse (and turn negative), or companies hike prices. Guess which choice they will pick.
Finally, courtesy of BofA, here is a list of the companies that have complained in recent weeks about soaring prices most if not all of which have proceeded to pass on price increases to consumers... that would be you dear readers:
- FAST (Industrials): “we are experiencing significant material cost inflation, particularly for steel, fuel and transportation costs.”
- GIS (Staples): “Looking ahead, as we experienced higher inflationary environment, our first line of defense will continue to be our strong holistic margin management cost savings program. In addition, we are taking actions now and in the coming months […] to drive net price realization that will benefit our FY2022. “
- CAG (Staples): “we're seeing input cost inflation accelerate in many of our categories and across the industry.”
- LW (Staples): “while the pandemic-related effects on our supply chain were the primary drivers of our cost increases, we also realized higher costs due to input cost inflation in the low single-digits. We expect that rate will begin to tick up in the coming quarters as edible oil and transportation costs continue to increase.”
- PPG (Materials): “we experienced a significant acceleration of raw material and logistics cost inflation during the quarter. Coming into the year, we were expecting an inflationary environment and had prioritized selling price increases across all of our businesses. This has helped us achieve solid price increases year-to-date. With a higher inflation backdrop, we have already secured further selling price increases and are in the process of executing additional ones during the second quarter. “
- DOV (Industrials): “What we are going to fight against between now and the end of the year […] is inflationary input costs between raw materials, labor, and price/cost […] the way it's looking we may have to intervene on price again in certain of the businesses over the balance of the year.”
- TEL (Tech): “I would expect our margins to modestly improve as we work our way forward here into the third and fourth quarter based on some of the actions that are underway and our ability to combat some of the inflationary pressures out there. […] Certainly, we're feeling the biggest inflation right now is on the freight side. The freight inflation has been significant. And as we battled through there and there's a variety of reasons for that including higher air freight and so forth in terms of that. And that's not unique to TE. Certainly, I think that's been as well publicized across the overall supply chain. […] labor cost is not a major issue on the inflation side, but labor availability in certain places that are still being more impacted by COVID continues to drive some inefficiencies.”
- CMG (Consumer Discretionary): “So, all of that is very, very manageable and we feel like if there is going to be significant increased inflation because of market-driven or because of federal minimum wage, we think everybody in the restaurant industry is going to have to pass those costs along to the customer.”
- ALLE (Industrials): “This guide incorporates pricing actions to offset direct material inflation, as well as reflecting our supply chain capability to mitigate industry challenges on supply and electronic component shortages. We anticipate that these challenges will persist for the balance of the year, and we will continue to monitor and adapt to changing market conditions.”
- WHR (Consumer Discretionary): “The global material cost inflation in particular in steel and resins will negatively impact our business by about $1 billion. We expect cost increases to peak in the third quarter.”
- PNR (Industrials): “All inflation remains high. We have instituted a number of selling price increases across the portfolio that we expect to help mitigate inflation in the second half of the year.”
- TSCO (Consumer Discretionary): “Compared to our initial outlook for the year, our forecast does reflect higher transportation costs and product inflation. We experienced increasing pressures from these factors during the first quarter and expect them to continue to be a headwind throughout 2021.”
- POOL (Consumer Discretionary): “We previously said that inflation would be in the 2% to 3% range but now believe it will be in the 4% to 5% with some products into double-digits. We don't anticipate any of this getting hung up in the channel so that will provide a tailwind for the year. Considering that most of our – most of the cost of constructing a new pool or remodeling an existing pool is tied up in labor we don't anticipate this inflation having a meaningful effect on demand as it relates to nondiscretionary products such as chemicals, inflation has simply passed through again with no real effects on demand.”
- LUV (Industrials): “Outside of salary, wages and benefits, the largest drivers of our sequential cost pressure are flight driven cost increases and landing fees, employee, customer and revenue related cost, and maintenance expense…”
- HON (Industrials): “Yeah, that's definitely a watch out item for the year. And for us, inflation is taking hold. There's no doubt about it. We knew it. We see it. It's real. And if you don't stay on top of it, the two areas where – and this is not a surprise – steel, semiconductors, copper, ethylene, those are the four elements that we saw substantial inflation in Q1. [..] I can tell you that we stood up a pricing team, which has been in place since the beginning of the year. We're quickly taking actions and we are staying ahead of it. And we're going to continue to monitor what happens and stay ahead of it. But it's a watchout item. I don't think things are going to abate. The short cycle is definitely hot. We all read the same articles around semiconductors and what's going on there, and I think we're going to have to just stay ahead of it. But we do expect an inflationary environment this year. And we're going to stay ahead of it. That's our commitment.”
- CE (Materials): “We're certainly feeling the inflationary factor. I think, the good news is we anticipated this coming back in the fourth quarter of last year already and started moving prices […] So, although it is an inflationary pressure, we've been able to push that through in our pricing and basically maintain the same level of variable margin.”
- KMB (Staples): “The biggest reason being that our pricing actions and the benefits of that will be coming through the P&L in the second half. In terms of input cost inflation, that is ramping in the first quarter, and the second quarter. We expect that, it will peak and then moderate and, in some cases, come down a bit in the second half.”
- MDLZ (Staples): “In terms of inflation, there is more inflation coming. And so, profitability is great in Q1. We believe we are going to hit the numbers as we had originally in mind. But the higher inflation will require some additional pricing and some additional productivities to offset the impact, which I believe at this point is absolutely manageable given that all these positions are pretty much hedged for 2021.”
- SHW (Materials): “On the cost side of the equation we now expect raw material inflation for the year to be in the high-single-digit to low-double-digit range, a significant increase from the low- to mid-single-digit range we communicated in January. And let me just begin by reiterating a little bit what John and Al have been saying. This whole area of raw material inflation is a transitory issue for us. It's not new for us. We've demonstrated an ability to manage through this many times in the past, and we'll get through this as well.”
- WM (Industrials): “We do expect that inflation will kick up a little bit, and so we'll get some help. And we're typically a beneficiary of higher inflation.”
- PKG (Materials): “We also anticipate continued inflation with freight and logistics expenses as well as most of our operating and conversion costs. However, energy costs should improve as we move into seasonally milder weather.”
- MMM (Industrials): “We are also raising prices, but it's going to take a little bit of time. The inflation has come in faster. So you're going to see 75 to 125 basis points of headwind which is the net of price versus inflation and logistics.” “On supply chain disruption, there are two pieces. One is of course the inflation that we've told you about which will cost 75 to 125 basis points of headwind between price and inflation and the raw material and logistics costs as well as making sure that we have all the product availability that we have. So that's the other, I would say, headwind to 1Q.”
- PHM (Consumer Discretionary): “We have updated our guide in terms of what the inflationary aspect of the sticks and bricks is. We have been at or near 5%, 6%. We're now 6% to 8%. And depending what lumber does, that could move a little bit even higher than that.”
- F (Consumer Discretionary): “We're definitely feeling the commodity headwind, as John said. And inflation, it feels like we're seeing inflation in variety parts of our industry kind of in ways we haven't seen for many years. On the other hand, it feels like it's all due to a lot of one-timers as the economy comes out of lockdown. So I think it's a bit too early to declare the run rate or where it's going to be. It's just too hard to tell from my standpoint.”
- AVY (Materials): “supply chains have remained tight and input costs have been increasing. As a result, raw material and freight inflation were above our initial expectations. And we have continued to see costs rise as we entered the second quarter We now expect mid to high single digit inflation for the year with variations by region and product category.”
- IDX (Health Care): “I would say on the inflationary front, it's kind of spotty for us. I mean remember we're a little further down the food chain. We don't buy a lot of giant quantities of base material. We buy things that have been converted, so it does have a little bit of a lag for us. And so we see the same things others are seeing where we buy lots of metals. There's some inflationary pressure; electronics, a few other places but we're navigating around those on the freight side. That's certainly a challenge both on the price, frankly more on the availability side. [...] We're no different than anybody else trying to find sea containers, trucking, trains, port facilities that have to unclog all of those things. Our model helps us. Our folks help us. I think as we go further out, the inflationary pressure, I actually think that's going to ramp up a bit for everybody.”
- SWK (Industrials): “As many of you follow, steel and resin represent the two largest commodity exposures and they have been impacted by rapid spot market increases as the global supply chain response to the surge of demand and temporary supply gaps. This dynamic has occurred across many of our key commodities, components, finished goods that we purchase. We now expect inflation headwinds to approximate $235 million, which is up $160 million versus our previous outlook of $75 million.”
- MAS (Industrials): “We have seen significant inflation in raw materials, namely copper, zinc, and resin, used in both our paint and plumbing businesses as well as increases in freight costs. All in, we expect our raw material and freight costs to be up in the mid single-digit range for the full year for both our Plumbing and Decorative segments, with inflation likely reaching high single-digit levels in both segments in the third and fourth quarters."
I haven't noticed much of an increase in bedding plants - yet.
Seed potatoes went fast - early.
Little late for potatoes in Kansas.
20Gauge
TB Fanatic
Take food prices. The United Nations Food Price Index is up 30% in the past five years and up 10% year-to-date (April 2021). The rise in food prices already caused protests all over the world in 2018 and it continues to reach new highs. The correlation in the price increase of most agricultural goods also shows that it is a monetary effect.
So the United Nations is willing to admit a 6% annual inflation for food the past five years.
Now they are also admitting a 10% in 4 months. On an annual basis this is 30% food inflation.
This is what they will admit. How bad is it really???
Seriously, when have you ever heard of the government or any government admitting the worst in real time. They always under state it (unless Trump related, then it is over stated).
So the United Nations is willing to admit a 6% annual inflation for food the past five years.
Now they are also admitting a 10% in 4 months. On an annual basis this is 30% food inflation.
This is what they will admit. How bad is it really???
Seriously, when have you ever heard of the government or any government admitting the worst in real time. They always under state it (unless Trump related, then it is over stated).
20Gauge
TB Fanatic
I have always been taught it is 3 digit inflation, but that was never a hard target.
My answer was on an annual basis, so you are saying the same, but 600% annually where I was saying 100% annually.
Either way is horrible.
Edited.....
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20Gauge
TB Fanatic
I remember past computer chip shortages from decades past when I worked in the industry, they never lasted less than 18 months.
Get Ready For The Most Painful Inflation Since The Jimmy Carter Years Of The 1970s
If you are too young to have been alive during the 1970s, you might want to read up on that decade, because current economic conditions are starting to become eerily similar to what we experiencedthemostimportantnews.com
Get Ready For The Most Painful Inflation Since The Jimmy Carter Years Of The 1970s
May 2, 2021
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If you are too young to have been alive during the 1970s, you might want to read up on that decade, because current economic conditions are starting to become eerily similar to what we experienced back then. In the 1970s, an energy crisis caused tremendously long lines at gas stations all over the country. In 2021, we don’t have a shortage of gasoline, but shortages of other key products are starting to cause very serious problems. In fact, as you will see below, even the Biden administration is publicly admitting that there will be “supply chain disruptions” in the months ahead. The 1970s also featured extremely painful inflation, and I certainly don’t need to tell you that prices have been rising very aggressively lately. In fact, Bloomberg is using the term “skyrocketing” to describe the “upward trajectory” of commodity prices…
Over the past year, the Federal Reserve has pumped more money into the financial system than ever before, and the U.S. government has been on a wild spending spree that makes Zimbabwe look fiscally conservative.
It was inevitable that this was going to cause rampant inflation, but the numbers that we are starting to see are so crazy they are difficult to believe. A couple weeks ago, Charlie Bilello posted a summary of how commodity prices have changed over the past year…
Lumber: +265%
WTI Crude: +210%
Gasoline: +182%
Brent Crude +163%
Heating Oil: +107%
Corn: +84%
Copper: +83%
Soybeans: +72%
Silver: +65%
Sugar: +59%
Cotton: +54%
Platinum: +52%
Natural Gas: +43%
Palladium: +32%
Wheat: +19%
Coffee: +13%
At this point, nobody can deny what is happening, and even the Biden administration is admitting that there will be “supply chain disruptions” and “transitory increases in prices”…
Biden administration officials would like for us to believe that this inflationary period will just be “temporary”, but exactly how do they plan to achieve that?
Do they have a plan to somehow pull trillions of dollars out of the system?
No, they are planning to borrow and spend trillions more.
In the 1970s, double-digit inflation made headlines for years on end. Many people believe that we are well on the way to a return to such levels, but according to John Williams of shadowstats.com, we are already there. In fact, if inflation was still calculated the way that it was back in 1980, we would already be in double-digit territory.
And for certain items, we are already seeing inflation that is off the charts.
For example, the price of corn is up more than 30 percent so far in 2021…
Corn is used in hundreds of different products at the grocery store, and so this is going to dramatically affect the food budgets of millions upon millions of American families.
Meanwhile, we continue to see more shortages start to emerge. Last week, the mainstream media was freaking out over our new nationwide chicken shortage…
That shortage is supposed to be “temporary”, but analysts are warning that the current computer chip shortage could last until 2022.
But despite all of the problems that I just detailed, Americans are increasingly optimistic about the future.
In fact, one recent poll found that a whopping 64 percent of all Americans “are optimistic about the direction of the country”…
And Americans are also extremely optimistic about the stock market. If you can believe it, Americans now have more of their assets invested in the stock market than ever before…
Most Americans seem to believe that happy days are here again, and the stage is set for an immense nationwide emotional meltdown once this “bubble of hope” inevitably bursts.
Anyone that believes that things are going to get better has a fundamental misunderstanding of the times in which we live.
We have just been through the most painful year for the U.S. economy since the Great Depression of the 1930s, and I know that most people would like to see things turn around, but that simply is not going to happen.
Very dark days are ahead, and those that are trusting Joe Biden to save America are going to be bitterly, bitterly disappointed.
20Gauge
TB Fanatic
Don't forget the cannibals......
vector7
Dot Collector
Pre-pandemic debt levels were 19 trillion.
We’ve printed 8 trillion since March 2020 and they want another 4 trillion on top of that.
We are headed for mega inflation.
View: https://twitter.com/ProHodlersigs/status/1389397105769426952
March 2020...
Trump: "But, we have to put the country to work.
Look, you're going to lose a number of people to the flu, but you're going to lose more people by putting a country into a massive recession or depression.
You're going to lose people, you're going to have suicides by the thousands. You're going to have all sorts of things happen, you're going to have instability.
You (DNC) can't just come in and say lets close up the United States of America the biggest, the most successful country in the world by far."
RT 30secs
View: https://twitter.com/FarhangNamdar/status/1243123456616603648
We’ve printed 8 trillion since March 2020 and they want another 4 trillion on top of that.
We are headed for mega inflation.
View: https://twitter.com/ProHodlersigs/status/1389397105769426952
March 2020...
Trump: "But, we have to put the country to work.
Look, you're going to lose a number of people to the flu, but you're going to lose more people by putting a country into a massive recession or depression.
You're going to lose people, you're going to have suicides by the thousands. You're going to have all sorts of things happen, you're going to have instability.
You (DNC) can't just come in and say lets close up the United States of America the biggest, the most successful country in the world by far."
RT 30secs
View: https://twitter.com/FarhangNamdar/status/1243123456616603648
Groucho
Has No Life - Lives on TB
In the article I put there, they give the example of 50% per month. At that rate, money isn't. I always used the thought that the money issued by the .gov simply had no value. I had read that many moons ago. Matters not since our ship of state is hurtling toward the rocky shoals at flank speed.
marsh
On TB every waking moment
Zerohedge
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com
"This Is Not Transitory": Hyperinflation Fears Are Soaring Across America
TUESDAY, MAY 11, 2021 - 06:41 AM
There was some good news for the (transitorily hyper-)inflation-ravaged US economy today when copper, wheat and lumber futures all fell after days of surging - in the case of the latter, the first drop in 13 days...
... pushing the Bloomberg commodity index lower after six straight days of gains.
Yet while today's boiling-off in commodities may have been a faint validation of the Fed's claim that this inflation is “transitory”, inflation pressures are unmistakably building, with Bloomberg's Vince Cignarella noting that the five-year/five-year inflation swap is above 2.5% and rising: "that’s the highest since January 2018 and just 10 basis points below levels we saw in January 2017."
Why is this important? As Cignarella explains, "Inflation swaps are used by financial professionals to mitigate/hedge the risk of inflation and are considered reasonably accurate estimates for the break-even rate for the period in question. They’re also helpful to central banks and dealers who are trying to determine the market’s future inflation expectations."
In short, the market is looking at all the signals and is growing convinced that whatever "this" is, it is not transitory.
And it's not just finance pros who are calling the Fed's bluff: according to the New York Fed’s survey of consumer expectations, median 1-year and 3-year inflation expectations by ordinary Americans jumped to a multi-year high of 3.4% and 3.1% respectively, the highest since September 2013.
Digging through the details reveals an even more alarming picture: over the next year consumers anticipate gasoline prices jumping 9.18%, food prices gaining 5.79%, medical costs surging 9.13%, the price of a college education climbing 5.93%, and rent prices increasing 9.49%!
This is hardly a "transitory inflation" expectation, to the contrary - expectations for sharply higher inflation are become firmly ingrained.
But wait, there's more: the CPI report on Wednesday is also expected to show price pressures leaped in April, and not just on a distorted year-over-year basis (where the base effect makes readings meaningless). The 0.3% core CPI M/M increase will be the highest print this century!
It gets worse: one week after we showed that mentions of “inflation” on company earnings calls have now quadrupled YoY; and have jumped nearly 800% YoY...
... as companies now openly freak out about soaring costs which they generously pass on to consumers, prompting BofA to conclude that "on an absolute basis, [inflation] mentions skyrocketed to near record highs from 2011, pointing to at the very least, “transitory” hyper-inflation ahead."
Maybe the hyperinflation will be transitory - if so, it would be the first time in history - but the soaring prices have clearly sparked a panic amid the broader population as the following chart of google searches of "inflation" shows.
Source: Lehman econometricsAnd so, with most assets now "fixed" by the Fed, with bonds having lost all their inflationary signaling as they now trade in a world of implicit yield curve control, and with stocks already in a massive bubble, is there any wonder why the chart of the latest crypto darling du jour - Ethereum - which so far has not been
"micromanaged" by the Fed (unlike the central bank's old nemesis, gold), looks the way it does...
... when increasingly more see the crypto asset class as one of the few remaining hedges for inflation, as even Bloomberg's John Authers recently admitted.
marsh
On TB every waking moment
Zerohedge
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com
Jim Grant: The Fed Can't Control Inflation
TUESDAY, MAY 11, 2021 - 12:02 PM
Via SchiffGold.com, Gold
Federal Reserve Chairman Jerome Powell insists inflation is “transitory.” As prices have spiked throughout the economy, Powell’s messaging has essentially been, “Move along. Nothing to see here.”
Peter Schiff has been saying the central bankers at the Fed can’t actually tell the truth about inflation because even if they acknowledge it’s a problem (and it is) they can’t do anything about it.
In a recent talk, Jim Grant, investment guru and founder of Grant’s Interest Rate Observer, echoed Peter, saying the Fed can’t control inflation.
During a webcast sponsored by State Street SPDR ETFs, Grant said he thinks “there’s a gale of inflation of all kinds in progress,” adding that he believes it will take the Fed by surprise and “overwhelm our monetary masters.” Grant said, inflation is “clear and present and will manifest itself in our everyday lives.”
That sounds like the exact opposite of Powell’s “transitory” mantra.
Peter has said that once the Fed is forced to admit that inflation isn’t transitory, it will be too late to take action. Grant made a similar prediction, saying inflation will “catch the Fed flatfooted. In response it will “prevaricate” – meaning speak or act in an evasive way. In fact, that already seems to be the central bank’s strategy.
The question is can the Fed actually control inflation. Grant doesn’t think so.
Therein lies the rub. Pinpointing inflation is no easy task. Grant noted that it’s easy for the Fed and government officials to downplay inflationary pressures because it is extremely difficult to measure. As Peter Schiff put it, CPI is a lie.
Grant used the evolution of the toothbrush into its electric form as an example. How do you measure the clear quality improvements in the toothbrush? The government uses hedonics to measure these changes, but as Grant pointed out, this is “inexact and not really a science.”
Grant believes that the economy can only tolerate 2.5% real rates. If that is breached, he thinks the Fed will have to resort to yield-curve control. If it does actually try to shrink its balance sheet and sell bonds, it will drive bond yields even higher. Fed bond-buying is the only thing propping up the bond market right now.
In fact, the Fed is propping up the entire economy. There is a sense that the Fed will always step in and save the markets. As a result, we have bubbles everywhere, from the stock market, to real estate, to cryptocurrency.
Meanwhile, the Fed continues to create money. M1 annual growth is 350%; M2 is growing at approximately 28%.
Grant said central bankers like Powell are guilty of hubris. They suffer from the delusion that they can actually control everything. Grant called the Fed “un-self-aware.”
marsh
On TB every waking moment
Zerohedge
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
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Should We Fear, Inflation Is Here
TUESDAY, MAY 11, 2021 - 09:09 AM
By Laura Cooper, Bloomberg reporter and Markets Live commentator
It’s becoming hard to ignore inflationary pressures, whether one is a central banker or not. Tech investors are taking notice with Monday’s Nasdaq 100 slump the largest since mid-March, while China’s producer prices accelerated overnight. VIX futures are higher with broad risk aversion setting up for European equities to catch up to the late downbeat U.S. session.
At least investor jitters that rising inflation could lift bond yields, and sap equities’ appeal could take comfort from real yields. The 10-year U.S. inflation-adjusted benchmark tumbled to three-month lows, keeping nominal yields in check as breakevens jumped to multi-year highs.
Financial conditions reached another record, while evidence of stocks’ rotation remains: S&P 500 energy and financials advanced over the past 5 sessions, value is outperforming growth –- particularly in Europe -- and the RTY/NDX is well, steady –- much like 10-year nominal yields around 1.60%.
U.S. labor market frictions look to be adding to inflation fears, with JOLTs data, a leading indicator of hiring, likely to signal workers’ growing pricing power. And the NFIB small business optimism will be watched today for supply side constraints –- last month, job openings that were “hard to fill” reached at least a four-decade high. Of course, labor market dislocations remain and a handful of Fed speakers today will no doubt look to assuage inflation fears and discount near-term tapering risks. Not like Bill Dudley.
Whether the Fed falls too far behind the curve remains up for debate. Markets, on the other hand, aren’t as comfortable looking through transitory inflation as evidence builds and expectations climb -- that could become a self-fulfilling prophecy after all.
marsh
On TB every waking moment
Zerohedge
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com
Rabo: "Transitory" Inflation Today; Price Controls And Rationing Tomorrow?
TUESDAY, MAY 11, 2021 - 09:01 AM
By Michael Every of Rabobank
Pricing and Poetic Justice
With global cargo routes log-jammed; a key US oil pipeline still shutdown, leading to another backlog of ships idling off-shore; log-jammed cargo ships off the Israeli port of Ashkelon watching missiles being fired overhead; the US navy interdicting a ship full of Iranian-supplied weapons in the Red Sea (as sanctions may be about to be lifted); Aussie iron ore at a price level three times above what was considered toppy until recently; lumber prices higher than the roofs they build; copper the new ‘gold’; semiconductors not available at all; and many agri commodity prices shooting up vertically like green shoots from the ground (though rain may dampen that move for some), today is the latest look at “transitory” inflation.
Chinese data saw CPI rise 0.9% y/y vs. expectations of a 1.0% increase, and up from 0.4% in March. PPI was higher, rising 6.8% y/y vs. a 6.5% consensus and up from 4.4%. So somebody is seeing margins squeezed by an unpleasant amount: but for so many heavily-indebted Chinese firms at least it’s better than PPI being stuck in negative territory when the interest rates they pay are positive. The global impact of that PPI move is somewhat muted by the upward move in CNY – for now.
Tomorrow, it’s the turn of the US. According to the media meme, US tech stocks tanked yesterday on the basis that inflation is now a real concern, despite the fact that US payrolls just said the opposite, and both the Fed and the Treasury emphatically said the same. So are the US tech companies that don’t pay attention to even simple balance sheet matters, like what they sell their services for and what it costs to produce them, really looking at the disconnect between nominal US 10-year yields remaining relatively low while the 5-year breakeven rate headed for 2.77% intra-day, the highest since 2008? (It is back at 2.73% at time of writing, so all is well, techies!) Does it really disrupt their disruptive business model if rates stay too low, which is the lifeblood of much of this tech bubble, and then have to rise years down the line, at a time when each firm involved likes to dream the little dream that it will be the next Bezos/Gates/Musk?
Not that this means we shouldn’t be concerned by inflation. As we wrote early in 2020, the Covid crisis was like fighting a war, fiscally. And when wars are over, there is a deflationary demand collapse, not a boom. Yet that is not the case today because:
- This war is far from over. Only some territory has been partially ‘liberated’. 100 countries have yet to receive a single vaccine shot – and some vaccinated countries are still seeing cases surge. It’s a race against time, as new strains try to work their way round vaccines;
- Global supply chains are going to remain disrupted for a long time;
- We are rolling the war straight into a Cold War, with all of the disruption that entails; and
- We are also getting post-war fiscal rebuilding before the war is even over.
If it is consumers, then real wages are going to fall, and demand follow. Even if CPI doesn’t record much of an impact, in the real world people will feel it. If it is firms, profits will collapse instead, and then investment. Or perhaps the government and central bank will resolve these issues: during wars we often see price controls, rationing, and/or industrial policy - which combination will it be this time? Indeed, what is the fairest resolution to this mess? How should the imminent price pain be apportioned in a scarred society? By markets? By regulators? If yes, based on what political philosophy? “Social justice”? “One Nation-ism”? “National security”? “I’m Alright Jack”? Rock, paper, scissors? Best out of three? Let justice be served!
In short, if a post-war period usually sees a slump and a pile of debt to fight over, for now we are still at the earlier stage, where we fight over supply chains and the impact of inflation instead. The debt issue can wait a while longer.
Meanwhile, as this all plays out in public view and yet to very little public discussion, firms in China are apparently vulnerable to more than inflation. There is also poetry. Shares in Meituan have slumped after its CEO posted, then deleted, a poem on social media about ancient Chinese emperor Qin Shi Huang burning books. Bloomberg wonders if this is going to be ‘Jack Ma 2.0’ as a result. This may be regarded quizzically by the West. However, how free is the average Western CEO to use Twitter to opine on anything beyond a certain Overton Window without major market ramifications? There is no room for “Roses are red, violets are blue” comments without instant ‘poetic justice’; which has seen its own inflation-like surge in recent years.
marsh
On TB every waking moment
8:49 min
‘Sick and tired!’: Will rising inflation rates push America towards Colombia chaos?
•May 11, 2021
Glenn Beck
Glenn says he is ‘SICK AND TIRED’ of politicians continuously lying to the American people. If they want to fundamentally transform the United States then they should OWN UP TO IT. But now, our leaders in Washington are lying to you about inflation, too. Inflation rates so high they'll do nothing but ‘screw the little guy.’ Glenn explains how Colombia — and the chaos currently occurring there — gives a glimpse into America’s possible, near future. Because the current similarities between the two nations are hard to ignore…
marsh
On TB every waking moment
Stanley Druckenmiller says the Fed is endangering the dollar's global reserve status
Fed policies could end up threatening the long-term health of the U.S. dollar, investing magnate Stanley Druckenmiller told CNBC.
ECONOMY
Stanley Druckenmiller says the Fed is endangering the dollar’s global reserve status
PUBLISHED TUE, MAY 11 20219:06 AM EDTUPDATED 5 HOURS AGO
Jeff Cox@JEFF.COX.7528@JEFFCOXCNBCCOM
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KEY POINTS
- Fed policies could end up threatening the long-term health of the U.S. dollar, investing magnate Stanley Druckenmiller told CNBC.
- “I can’t find any period in history where monetary and fiscal policy were this out of step with the economic circumstances, not one,” the chair and CEO of Duquesne Family Office said.
- Though he agreed with the early steps the Fed took during the pandemic, he said the policies have continued for too long.
VIDEO on website 10:36 min
Stanley Druckenmiller: Current Fed policy is totally inappropriate
Federal Reserve policies aimed at keeping markets and the economy afloat during the pandemic could end up threatening the long-term health of the U.S. dollar, investing magnate Stanley Druckenmiller told CNBC on Tuesday.
The chairman and CEO of Duquesne Family Office said the Fed’s insistence on holding interest rates down and buying trillions in bonds even though markets are thriving and the economy is booming is a long-term risk.
“I can’t find any period in history where monetary and fiscal policy were this out of step with the economic circumstances, not one,” Druckenmiller said during a”Squawk Box” interview.
Though he does not take issue with the Fed’s initial actions to combat the pandemic-related threats, Druckenmiller said the central bank has kept its foot on the accelerator too long.
He asserted that the Fed has continued its policies to help underwrite the spending binge in Congress, which has allocated more than $5 trillion in stimulus and is contemplating trillions more in infrastructure-related spending.
WATCH NOW
VIDEO on website 5:33 min
Jim Cramer explains why he disagrees with Druckenmiller’s criticism of the Fed
Over the long haul, he said, the policies and the heavy debts and deficits they support will threaten the dollar’s standing as the world’s reserve currency. That status means the dollar is accepted for transactions and as a store of wealth anywhere and is widely held by central banks around the world.
“If they want to do all this and risk our reserve currency status, risk an asset bubble blowing up, so be it. But I think we ought to at least have a conversation about it,” Druckenmiller said.
“If we’re going to monetize our debt and we’re going to enable more and more of this spending, that’s why I’m worried now for the first time that within 15 years we lose reserve currency status and of course all the unbelievable benefits that have accrued with it,” he added.
Interviewed later in the day, St. Louis Fed President James Bullard defended the central bank’s actions and said it’s not time yet to remove the policy accommodation while the pandemic continues.
“I don’t know how many pandemics Stan has lived through. These don’t come along that often,” Bullard said on CNBC’s “Closing Bell.” I think the response was really good both on the fiscal and monetary side.”
To be sure, others have warned in the past that Fed excesses could threaten the dollar, but the greenback has retained its position in the world.
One reason for that is there have been no other viable alternatives introduced.
Druckemiller has entertained the thought that a challenge could come from the crypto world. He said in the CNBC interview that the ultimate solution could be “some kind of ledger system invented by some kids from MIT or Stanford” though he conceded that “I don’t know what it will be.”
However, he noted that in the early days of the pandemic, other foreign governments already voiced their concerns about the dollar by selling Treasurys, the opposite of what normally would happen in a crisis when ultra-safe U.S. debt is generally seen as a haven.
Indeed, foreign holdings of government bills, notes and bonds actually have decreased, falling by $127 billion or nearly 2% over the past year, according to Treasury Department data. Foreigners hold nearly one-third of the public portion of the $28.2 trillion U.S. debt.
Druckenmiller said central banks have been the root of a lack of confidence in dollar stability.
“The problem has been clearly identified. It’s [Fed Chair[ Jerome Powell and the rest of the world’s central bankers,” he said. “There’s a lack of trust.”
Druckenmiller’s comments came a day after he and Duquesne partner Christian Broda said in an opinion piece for The Wall Street Journal that Powell “needs to recognize the likelihood of future political pressures on the Fed and stop enabling financial and market excesses.”
Similarly, former New York Fed President William Dudley wrote in Bloomberg News that markets are underestimating how much the central bank will have to raise interest rates in the years ahead to keep up with the inflation it is trying to foster.
WATCH NOW
VIDEO on website 3:31 min
Alternative data suggests key inflation report could show price hikes
The Fed itself, in its semiannual Financial Stability Report last week, said it worried about risks coming from soaring asset prices.
Druckenmiller told CNBC he has “no doubt whatsoever that we are in a raging mania in all assets.”