2021 - Is inflation finally back in the conversation?

[Hozz 1,012]

16 hours ago, Wulaw Horn said:

What’s the thesis?  

The biggest takeaway is their demographics.  The one child policy and no immigration has destroyed their future.  He claims they are the fastest aging population in world history as well as having the largest sex imbalance in history.  He thinks they will cease to be a unified country within 10 years (historically the norm for them, disunity) and that there will be half as many Chinese people in 2100 as there are now.  To be fair I have only read his first two books and am just starting the third.  I think he has a fourth coming out this year.

[Blotto 23,434]

17 hours ago, Wally Fairway said:

I couldn't find the supply chain thread, but those problems are part of the inflationary push. And they are coming back, if shipping container bottlenecks are any indication.

Something seems odd about that graph. I'm confused how data from 2017-2021 and  2022 seems to move in a synchronized fashion. I understand that the average and range over a 4 year period may move in tandem with 2021 data because the 21 data is part of the data set, but I wouldnt  think that 2022 and 2021 would be so strongly correlated on a week by week basis. 

[Trey3216 15,325]

39 minutes ago, Blotto said:

Something seems odd about that graph. I'm confused how data from 2017-2021 and  2022 seems to move in a synchronized fashion. I understand that the average and range over a 4 year period may move in tandem with 2021 data because the 21 data is part of the data set, but I wouldnt  think that 2022 and 2021 would be so strongly correlated on a week by week basis. 

Mostly has to do with seasonal product cycles to trading partner nations.  

[crash_davis 23,084]

shipping companies earned astounding record profits last year. they are not going to want to quickly "solve" the supply chain mess, especially their contribution to that mess.

[Wulaw Horn 18,980]

7 hours ago, Hozz said:

The biggest takeaway is their demographics.  The one child policy and no immigration has destroyed their future.  He claims they are the fastest aging population in world history as well as having the largest sex imbalance in history.  He thinks they will cease to be a unified country within 10 years (historically the norm for them, disunity) and that there will be half as many Chinese people in 2100 as there are now.  To be fair I have only read his first two books and am just starting the third.  I think he has a fourth coming out this year.

I mentioned the demographic ticking time bomb in my shorting China as competition for us as a world super power. I'd love to see what the current deal on that is.  Thanks for the recommendation- will probably check that out if it's well written and thought out.

Hell, I'm worried about our country having 60/40 split in higher education and a birth rate of 2.2 or whatever it is demographically and what that will do for us. That's a layup by comparison to what they are dealing with in gender imbalance and greying/declining population. 

[Hozz 1,012]

3 hours ago, Wulaw Horn said:

I mentioned the demographic ticking time bomb in my shorting China as competition for us as a world super power. I'd love to see what the current deal on that is.  Thanks for the recommendation- will probably check that out if it's well written and thought out.

Hell, I'm worried about our country having 60/40 split in higher education and a birth rate of 2.2 or whatever it is demographically and what that will do for us. That's a layup by comparison to what they are dealing with in gender imbalance and greying/declining population. 

You can get on Youtube and put his name in there and listen to some interviews from him before you pull the trigger on a book.  He also is a guest on some podcasts if you do podcasts.  He has his own website too, but I can't vouch for it.

[Immaculate Vibes 114]

On 4/25/2022 at 8:36 AM, Immaculate Vibes said:

Economy slowing?

 

 

[Trey3216 15,325]

3 hours ago, Immaculate Vibes said:

 

We'll know tomorrow morning at 7:30.  

[TxTower 650]

It’s official. The economy contracted by 1.4% in the first quarter primarily because of a ballooning trade gap and slower inventory growth.


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[Cheeseweasel 26,437]

Whelp. It was fun while it lasted. 

[Trey3216 15,325]

11 minutes ago, TxTower said:

It’s official. The economy contracted by 1.4% in the first quarter primarily because of a ballooning trade gap and slower inventory growth.


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Don't worry, the equity futures are up!!   

[Cheeseweasel 26,437]

3 minutes ago, Trey3216 said:

Don't worry, the equity futures are up!!   

Baked in!

[Laxtonto 11,932]

13 minutes ago, TxTower said:

It’s official. The economy contracted by 1.4% in the first quarter primarily because of a ballooning trade gap and slower inventory growth.


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I was expecting bad…. But holy fucking shit….

 

The scary part is much of Q2 should already be somewhat priced in with the shipping lag on inventories and no real help in sight for gas prices.

So how bad will Q2 be and will it be bad enough to officially classify this as a recession?

[phdhorn 6,224]

25 minutes ago, TxTower said:

It’s official. The economy contracted by 1.4% in the first quarter primarily because of a ballooning trade gap and slower inventory growth.


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Yup, here it comes, just like the rats following the Pied Piper - spending slows, demand goes down, inventories go down.. and voila!  You got your recession.

Still not too late, but nah, it probably is.  The only question is one I ask South Austin's mom nightly - how deep?

[gmr548 16,511]

1 minute ago, Laxtonto said:

I was expecting bad…. But holy fucking shit….

 

The scary part is much of Q2 should already be somewhat priced in with the shipping lag on inventories and no real help in sight for gas prices.

So how bad will Q2 be and will it be bad enough to officially classify this as a recession?

Official definition of a recession is two quarters of consecutive contraction, so in that sense it is pretty binary.

Who knows what Q2 will look like. On the one hand, the bulk of the impact of the war and increasing interest rates will be seen in that data. On the other hand, consumer spending and job growth remain strong. Exports being down and a comparison to Q4, which showed huge growth as companies tried to build up inventory to hold up against supply chain issues, are the main drivers. It's conceivable for Q2 to show a lot of things, including a recession or a bounce back. Just weird times these days.

[Trey3216 15,325]

10 minutes ago, Laxtonto said:

I was expecting bad…. But holy fucking shit….

 

The scary part is much of Q2 should already be somewhat priced in with the shipping lag on inventories and no real help in sight for gas prices.

So how bad will Q2 be and will it be bad enough to officially classify this as a recession?

Very good chance of it.  Consumer spending is definitely going to be lower in Q2, as we've seen rail shipments down the past several weeks.  Remember that fuel expenditures make up 20% of the lowest quartile earners income.  That cost being up 50% YoY isn't going to help.  

[Cheeseweasel 26,437]

4 minutes ago, gmr548 said:

which showed huge growth as companies tried to build up inventory to hold up against supply chain issues,

No. No one can build up inventory right now. Everyone is selling shit in hope that it hits the dock/plant in time to fulfill orders. Inventories are MASSIVELY down. 

 

[gmr548 16,511]

No. No one can build up inventory right now. Everyone is selling shit in hope that it hits the dock/plant in time to fulfill orders. Inventories are MASSIVELY down. 
 

Read my post again. I didn’t say that was the case now. It was, however, the case in Q4 2021, to which current data is being compared.

[phdhorn 6,224]

29 minutes ago, Cheeseweasel said:

No. No one can build up inventory right now. Everyone is selling shit in hope that it hits the dock/plant in time to fulfill orders. Inventories are MASSIVELY down. 

Eventually the huge demand for stuff that's not available (or won't arrive for 32 years after ordering) will keep triggering higher and higher prices for that good, which in turn will cause spending to dwindle, which will cause output to drop as well.  Time and tested formula for recession.

The typical Chinese psychotic reaction in Shanghai to the outbreak, essentially locking workers in their homes, has put a knife into any hopes of even semi-quick recovery.  It's caused enormous supply shortages in good (see Apple Computer) and MASSIVE logjams in shipping in Shanghai (essentially the country's most important port by a few galaxies).  Not only are workers not working, they're not shipping, and what is available for shipping is backlogged and getting worse.

I've been expecting something shipped from China, normally a 2 week turnaround, going on 6 and no hope in sight (the message I get that people are "working hard with their suppliers" is good for the comic value alone, if not for being anywhere close to the truth.

While it's still not inevitable that recession is here, it's almost inevitable that recession is here.

[TxTower 650]

While it's still not inevitable that recession is here, it's almost inevitable that recession is here.

Deutsche Bank put in the call for a major recession on Tuesday. Aggressive tightening necessary to bring inflation to heel, will be the cause. Hopefully the Fed doesn’t pussy out on a 50 bps hike like they did last meeting. Do it and get it over with.


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[Trey3216 15,325]

5 minutes ago, TxTower said:

 

Deutsche Bank put in the call for a major recession on Tuesday. Aggressive tightening necessary to bring inflation to heel, will be the cause. Hopefully the Fed doesn’t pussy out on a 50 bps hike like they did last meeting. Do it and get it over with.


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Yep.  As much as it would wreck the market in the short term, the FED needs to hike it a full point the next 2 meetings.  Been discussing with some mortgage folks I know and the real rates needed to ease the housing price freight train are in the 12-15% range.  Full on late 70's stagflation shit.  

[phdhorn 6,224]

One ray of hope is that there are some missing ingredients in this preliminary report, and likely it'll be revised up in the "final" Q1 next month, but it's still not good.

- Consumer spending held the line (barely), which probably propped this up a lot more from "disaster" numbers.
- Business investment also managed to eke up, though a lot less than in previous quarters - watch this for a negative number next quarter.
- The most alarming stat is trade imbalance - exports rose only modestly while imports shot up.  This is stagflation fuel and likely the biggest reason for this rept.
- The Fed has to walk a tightrope with the 50bps on taming inflation vs. causing recession.  Almost a lose-lose.

Right at this juncture, the prognosis is for another slightly neg. quarter coming, but not so much that we're in full-blown recession.  However if prices for goods are such that demand falls, and suppliers can't get U.S. products out, the lack of exports will drag this down to 2009 levels.  It'll get worse if U.S. manufacturing is driven down by: 1) shipping problems; 2) lack of workers; 3) lack of shippers, and 4) demand falloff as goods prices spiral up.  Not a good way to be outfitted for crusing chicks (or economic prosperity).

Hopefully the money is on mild pause ("technical" recession) but not a cliff-dive.  However, stick a needle in a wild horse's ass, and you never know which way he'll go...

Edited April 28, 2022 by phdhorn

[Cheeseweasel 26,437]

26 minutes ago, TxTower said:

Deutsche Bank put in the call for a major recession on Tuesday. Aggressive tightening necessary to bring inflation to heel, will be the cause. Hopefully the Fed doesn’t pussy out on a 50 bps hike like they did last meeting. Do it and get it over with.

 

It's too late. Lowering interest rates has been the Fed's "go to" in response to recession. Now we have recession and inflation. Time to grab your ankles. 

[Incredulity 11,564]

1 hour ago, Trey3216 said:

ease the housing price freight train are in the 12-15% range

[Immaculate Vibes 114]

 

[TxTower 650]

Yep.  As much as it would wreck the market in the short term, the FED needs to hike it a full point the next 2 meetings.  Been discussing with some mortgage folks I know and the real rates needed to ease the housing price freight train are in the 12-15% range.  Full on late 70's stagflation shit.  

We need another Paul Volcker. Hopefully Powell grows a pair before it’s too late.


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[phdhorn 6,224]

Good news:  Apple had a good day, posted earnings above expectations, despite supplies/etc.  
Bad news:  Amazon had its first quarterly loss since 2015.  

A good chunk of Amazon's loss is due to investment in Rivian and was expected.  But, this is indirectly due to inflationary causes, as Rivian had to drastically reduce its production forecast by half, due to increased prices of goods, due to supply chain issues.  Amazon's investment went pop.  So not unrelated to monetary events.

Spending will determine whether recession occurs next July (when Q2 comes out) or not.

[Trey3216 15,325]

14 hours ago, phdhorn said:

Good news:  Apple had a good day, posted earnings above expectations, despite supplies/etc.  
Bad news:  Amazon had its first quarterly loss since 2015.  

A good chunk of Amazon's loss is due to investment in Rivian and was expected.  But, this is indirectly due to inflationary causes, as Rivian had to drastically reduce its production forecast by half, due to increased prices of goods, due to supply chain issues.  Amazon's investment went pop.  So not unrelated to monetary events.

Spending will determine whether recession occurs next July (when Q2 comes out) or not.

I think recession is already upon us.   

[Blotto 23,434]

23 hours ago, TxTower said:

 

Deutsche Bank put in the call for a major recession on Tuesday. Aggressive tightening necessary to bring inflation to heel, will be the cause. Hopefully the Fed doesn’t pussy out on a 50 bps hike like they did last meeting. Do it and get it over with.


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Can someone help me out here, the fed hasnt really done shit YET this year have they? Basically one rate increase of .25% at the March meeting.  Everything else has just been talk of what rate increases they may find appropriate

March - https://www.thebalance.com/current-federal-reserve-interest-rates-4770718

 

April - https://www.barrons.com/articles/interest-rate-hikes-51650675267

Quote

In the past week, Fed officials stepped up their rhetorical anti-inflation campaign, with Jerome Powell all but promising a half-point increase in the federal-funds target range at the next Federal Open Market Committee meeting, on May 3-4.

Quote

The markets’ moves contrast with the minimal actual adjustment in the Fed’s policy stance, with a funds-rate target range of 0.25%-0.50%, up just a quarter-point from its near-zero pandemic emergency level, and continued expansion of its $8.9 trillion balance sheet by another $10 billion in the latest week. In McClellan fashion, the FOMC is expected to announce at next month’s confab its battle plan to begin shrinking its balance sheet, which has more than doubled from its prepandemic total.

 

So in reality, despite all of the talk, the current rates are still just a qtr point over all time lows? What the fuck are they waiting for? 

Edited April 29, 2022 by Blotto

[Cheeseweasel 26,437]

7 minutes ago, Blotto said:

 

So in reality, despite all of the talk, the current rates are still just a qtr point over all time lows? What the fuck are they waiting for? 

Never forget that the FED are politically appointed positions. No CR, but they won't do shit until they are "allowed" to do shit. 

Raising interest rates is a long term fix but will cause short term chaos. We are in an election year.

[jimmyjazz 45,557]

4 hours ago, Trey3216 said:

I think recession is already upon us.   

Well, except for that tricky part where there is an actual definition of "recession" that hasn't (yet) been met.

[Trey3216 15,325]

Just now, jimmyjazz said:

Well, except for that tricky part where there is an actual definition of "recession" that hasn't (yet) been met.

No shit?  

 

I mean, you never find out until after the fact, officially.  

Dow 30 down 7.8% YTD, 9.7% off the highs

Nasdaq down 19.21% YTD, 21.9% off highs

S&P down 11.56% YTD, 12.5% off highs

 

If the markets are a leading indicator, and transports are a leading indicator with GDP being a lagging indicator and already negative for 1 quarter, then it looks damn close like we are already in a recession and will "confirm it" in July.   

[Immaculate Vibes 114]

1 hour ago, Blotto said:

Can someone help me out here, the fed hasnt really done shit YET this year have they? Basically one rate increase of .25% at the March meeting.  Everything else has just been talk of what rate increases they may find appropriate

March - https://www.thebalance.com/current-federal-reserve-interest-rates-4770718

 

April - https://www.barrons.com/articles/interest-rate-hikes-51650675267

 

So in reality, despite all of the talk, the current rates are still just a qtr point over all time lows? What the fuck are they waiting for? 

This isn’t a hard chart to read what happens next. You could show it to an elementary school kid and ask them to spot the pattern.

You can’t raise rates to historic levels at our current levels of debt. You can’t taper a ponzi as they say. 
 

8 minutes ago, jimmyjazz said:

Well, except for that tricky part where there is an actual definition of "recession" that hasn't (yet) been met.

Yeah. He’s making a prediction. Unless economic activity has picked up since Q1 then we’ll be there. Current Atl Fed GDP now estimate for Q2 is 1.9%

[Trey3216 15,325]

7 minutes ago, Immaculate Vibes said:

This isn’t a hard chart to read what happens next. You could show it to an elementary school kid and ask them to spot the pattern.

You can’t raise rates to historic levels at our current levels of debt. You can’t taper a ponzi as they say. 
 

Yeah. He’s making a prediction. Unless economic activity has picked up since Q1 then we’ll be there. Current Atl Fed GDP now estimate for Q2 is 1.9%

The ATLFed GDPNow final estimate  for Q1 was .4 after being walked down from mid to high 1's.  

[Cheeseweasel 26,437]

5 minutes ago, Trey3216 said:

The ATLFed GDPNow final estimate  for Q1 was .4 after being walked down from mid to high 1's.  

[phdhorn 6,224]

More bad numbers this a.m.
- PCEX up 5.3% (a .1 better than March, but still bad)
- PCEX w/energy and food 6.6% (fastest since 1/82); up .9% from Feb (which was "only" up .5% from Jan)
- Real Disposable Income down .4% March (was up .1% in Feb.)

The disposable is the biggest item here - this absolutely affects consumer spending.  See what happens next month or so.
I think the Fed was ready for that 50bps hike - before the -1.4 knocked them in the teeth.  So now they don't know what the hell to do - either way (a good jump or not much/nothing) is gonna hurt.  Kinda like being in Willie Wonka's Shrinking Room:



 

[52-80 19,090]

https://www.whitehouse.gov/briefing-room/press-briefings/2022/04/28/press-briefing-by-press-secretary-jen-psaki-april-28-2022/

Quote

Q    But broadly speaking, is there any concern that, you know, given this narrative that [canceling student debt] could have an inflationary impact...?

Quote

A   What I would say is that the way that inflation impacts people across the country is costs — right? — costs to their bank accounts, costs to their budgets.  And what we’re talking about here is how to provide people with relief, how they can — how we can provide them with relief or consider providing them with relief so that they have more money to spend on things in their lives. 

Thanks Jen.  Giving people "more money to spend on things" is definitely one strategy to lower costs

[UT_OB1 2,200]

Another chemical cost increase on our raw materials side. 10% increase in price from our normal sulfuric acid supplier, but they are limited to 2 loads a month at that price. The other supplier that was about 3% more expensive announced a 20% price increase. 

[Cheeseweasel 26,437]

13 minutes ago, UT_OB1 said:

Another chemical cost increase on our raw materials side. 10% increase in price from our normal sulfuric acid supplier, but they are limited to 2 loads a month at that price. The other supplier that was about 3% more expensive announced a 20% price increase. 

Yup. It's a rare week when I don't get a letter that starts with "Raw material increases and allocations continue to play a major part in supply chain disruptions bla bla bla".

[UT_OB1 2,200]

Just now, Cheeseweasel said:

Yup. It's a rare week when I don't get a letter that starts with "Raw material increases and allocations continue to play a major part in supply chain disruptions bla bla bla".

Just based in the way things rotate, either caustic or drums will probably be next week. Or full face respirator parts. I think we may have fucked up on our forklift lease. We usually sign a new 3 or 4 year lease at the end of the current one, no big deal. Well the current one is coming to a close and I’ve been told by the buyer lead times for new forklifts are pushing out to a year. 

[Immaculate Vibes 114]

2 hours ago, 52-80 said:

https://www.whitehouse.gov/briefing-room/press-briefings/2022/04/28/press-briefing-by-press-secretary-jen-psaki-april-28-2022/

Thanks Jen.  Giving people "more money to spend on things" is definitely one strategy to lower costs

They’re losing control. This is the point in the big debt cycle that we’ve reached. Elevated inflation in the face of economic slowing. 10 times out of 10 governments are going to print more money rather than impose immediate economic harm on their population. 
 

Student loan forgiveness is one of the steps in our progression. No CR, just discussing monetary effects. It’s basically “helicopter money” or if you like crypto terminology, it’s an “airdrop”. It’ll go into the positive feedback loop and we’ll escalate from there down the line, with eventual loss of faith in the Fed and our govt. 

Edited April 29, 2022 by Immaculate Vibes

[TxTower 650]

They’re losing control. This is the point in the big debt cycle that we’ve reached. Elevated inflation in the face of economic slowing. 10 times out of 10 governments are going to print more money rather than impose immediate economic harm on their population. 
 
Student loan forgiveness is one of the steps in our progression. No CR, just discussing monetary effects. It’s basically “helicopter money” or if you like crypto terminology, it’s an “airdrop”. It’ll go into the positive feedback loop and we’ll escalate from there down the line, with eventual loss of faith in the Fed and our govt. 

You left out the part where they raise taxes to pay for the ballooning national debt.


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[TxTower 650]

I think the Fed was ready for that 50bps hike - before the -1.4 gave them cover to puss out again.

FIFY


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[Cheeseweasel 26,437]

34 minutes ago, TxTower said:

You left out the part where they raise taxes to pay for the ballooning national debt.
 

[bernorange 8,348]

The price of the carton (dozen) of eggs that I normally buy jumped 20% from a week or so ago to yesterday.  Even though I'm aware of supply chain issues and rising inflation in the abstract, it was still a bit jarring to see it while I was shopping yesterday.

[Parliament 14,134]

Bird Flu.  Not good.  We done clucked up.

[FORTY NINE TO ZERO 2,630]

this china shutdown is bad. i can’t get half the shit i need to keep petrochem facilities operating. we can’t even air freight stuff in. 

 

inflation is about to skyrocket even more so than it has been. 

[tbone_ 14,021]

3 Mother’s Day cards. $25.

[Knoxtnhorn 5,929]

 

40 minutes ago, tbone_ said:

3 Mother’s Day cards. $25.

Yep.  Mexican restaurant I take the family to quite often went from $120 to $180 sometime over the last 4 weeks.

[bluto 4,891]

Always wondering these days how often restaurants and bars eff with their pricing now that menus are QR. or if they scrapped hard menus/didn’t revive them just for the ease of price change.