Re: Inflation continues on record pace.

by **Motown Spartan** Thu Feb 22, 2024 8:57 am

Trapper Gus wrote:
Motown Spartan wrote:

I’m not sure the term dead cat bounce applies when we’re just off of record highs.

Okay, my amateur analysis says the PE rations are over the moon, and that the S&P plus Dow are being propped up by a few really big stocks in their portfolio while more stocks in their indexes are going down every day than going up, so unless the Fed unexpectedly signals more rate cuts eventually, in the next few months, stocks indexes will fall some.

Of course, in stocks my analysis is almost always wrong, so there is that.

Therefore, I am expecting a pull back with "bounces" on the way down.

Well, it's never a straight line in either direction.

But the dead cat bounce is a small and short lived recovery in price during a sustained decline.

Example: A stock price hits an all time high of say $250 and then steadily declines down to $200. It then recovers up to $210 (providing some hope of a real recovery) before ultimately declining further down below the $200 it was at just recently.

by **Trapper Gus** Fri Feb 23, 2024 8:13 am

Goldman also pointed out that the single largest component in the Consumer Price Index — 27 percent of the basket! — is a price nobody actually pays: owners’ equivalent rent, an estimate of what homeowners would be paying if they rented their houses. There are reasons the bureau measures housing costs this way, but there are also reasons to believe that in recent years that number has become misleading, distorting and exaggerating estimates of overall inflation. As it happens, the B.L.S. also produces an estimate of prices excluding owners’ equivalent rent, roughly matching the way European countries measure inflation. This “harmonized” index is up only 2.3 percent over the past year.

https://www.nytimes.com/2024/02/22/opinion/biden-economy.html

by **Trapper Gus** Thu Feb 29, 2024 11:43 am

CPI rose less than last month but markets freak anyway.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in January on a seasonally adjusted basis, after rising 0.2 percent in December, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.1 percent before seasonal adjustment.

https://www.bls.gov/news.release/cpi.nr0.htm

Let it be noticed that in January there is a statistical adjustment to the CPI, thus the CPI for January each year as calculated using different base numbers than the CPI for the month before.

Each year with the January CPI release the expenditure reference period is updated to use the most recent Consumer Expenditure data. It is worth noting that a change in the expenditure reference period results in a change in the implicit quantity Q assigned to each basic index, but not the implicit price component p of the aggregation weight AW of each basic index.

Every years, BLS updates its set of aggregation index weights based on CE data collected from the t – 2 year. In January 2023, BLS replaced its old set of aggregation weights with a new 1-year set of weights from expenditure data collected in 2021.

https://www.bls.gov/opub/hom/cpi/calculation.htm

Sort of missed that the PPE, the Fed's favorite inflation index, came in right where expected, which is a positive for lower rates later this year.

https://www.cnn.com/2024/02/29/economy/pce-inflation-spending-january/index.html

The weights for single family detached homes increased materially from December 2023 to January 2024. All of you searching for the source of the divergence have found it
Markets have already figured out that something screwy has been going on with rents in the report. Economist Ian Shepherdson (who is a great economist) is cited in the report saying the OER skew should continue for the next five months then revert to the rate of increase of primary rent.

If so, that could keep CPI elevated. At the same time, would the Fed be increasingly likely to look past it? Fed officials have already highlighted skews in the CPI report as a reason for not getting too excited.

by **Trapper Gus** Fri Mar 22, 2024 8:16 am

Food prices and overall inflation will rise as temperatures climb with climate change, a new study by an environmental scientist and the European Central Bank found.

Looking at monthly price tags of food and other goods, temperatures and other climate factors in 121 nations since 1996, researchers calculate that “weather and climate shocks” will cause the cost of food to rise 1.5 to 1.8 percentage points annually within a decade or so, even higher in already hot places like the Middle East, according to a study in Thursday’s journal Communications, Earth and the Environment.

And that translates to an increase in overall inflation of 0.8 to 0.9 percentage points by 2035, just caused by climate change extreme weather, the study said.

https://apnews.com/article/inflation-climate-change-food-prices-heat-6e5297e12868aaf797529bb755268818

by **Trapper Gus** Sun Mar 24, 2024 11:01 am

https://seekingalpha.com/article/4679482-inflation-is-much-tamer-than-headline-data

https://wolfstreet.com/2024/03/12/beneath-the-skin-of-cpi-inflation-february-inflation-saga-far-from-over-core-cpi-core-services-cpi-in-ominous-6-month-trend/

https://www.forexlive.com/news/whats-really-going-on-with-us-shelter-inflation-the-bls-offers-some-hints-20240307/

https://wolfstreet.com/2024/03/04/inflation-the-big-housing-arbitrage-office-cre-skid-marks-of-chinas-re-chaos-in-the-us-legacy-automakers-ev-woes-and-other-thoughts/

by **Floyd Robertson** Tue Mar 26, 2024 9:38 am

OK, not going to lie, this one is going to hit hard.

Cocoa Breaks $10,000 Record, With Pricier Chocolate to Follow

Cocoa futures surged above an unprecedented $10,000 a ton, extending a historic rally that’s already seen prices double this year and which is raising the cost of chocolate.

The market is being rattled by poor crops in key West African growers that has put the world on course for a third straight annual supply deficit. The industry is grappling with the legacy of poor returns paid to cocoa farmers and fears are mounting about being able to source enough beans.

As well as concerns about scarce physical supplies, pressures are also building in the financial market, where some traders have sold futures to hedge against physical holdings. But as they wait for the contracts to mature they need cash to meet margin calls on losses on derivatives, and in a rising market can be forced to close out short positions, helping to fuel the rally.

F'in Bidenomics.

by **Trapper Gus** Tue Mar 26, 2024 9:45 am

Floyd Robertson wrote:OK, not going to lie, this one is going to hit hard.

Cocoa Breaks $10,000 Record, With Pricier Chocolate to Follow

Cocoa futures surged above an unprecedented $10,000 a ton, extending a historic rally that’s already seen prices double this year and which is raising the cost of chocolate.

The market is being rattled by poor crops in key West African growers that has put the world on course for a third straight annual supply deficit. The industry is grappling with the legacy of poor returns paid to cocoa farmers and fears are mounting about being able to source enough beans.

As well as concerns about scarce physical supplies, pressures are also building in the financial market, where some traders have sold futures to hedge against physical holdings. But as they wait for the contracts to mature they need cash to meet margin calls on losses on derivatives, and in a rising market can be forced to close out short positions, helping to fuel the rally.

F'in Bidenomics.

“When we’re at this price, it’s hard to tell whether these prices are justified,” said Paul Joules, an analyst at Rabobank in London. “Whenever we have a dip in the market, it seems to shoot straight back up, which is more to do with the commercials, they’ve been net buyers.”

If I understand this, highly unlikely that I do, it sounds like speculators have a corner on the market.

by **Floyd Robertson** Tue Mar 26, 2024 9:48 am

Trapper Gus wrote:
Floyd Robertson wrote:OK, not going to lie, this one is going to hit hard.

Cocoa Breaks $10,000 Record, With Pricier Chocolate to Follow

F'in Bidenomics.

“When we’re at this price, it’s hard to tell whether these prices are justified,” said Paul Joules, an analyst at Rabobank in London. “Whenever we have a dip in the market, it seems to shoot straight back up, which is more to do with the commercials, they’ve been net buyers.”

If I understand this, highly unlikely that I do, it sounds like speculators have a corner on the market.

I certainly don't know the answer to that. Where is Motown Spartan when you need him? Gallivanting around London.

by **Trapper Gus** Thu Mar 28, 2024 7:57 am

Floyd Robertson wrote:
Trapper Gus wrote:

If I understand this, highly unlikely that I do, it sounds like speculators have a corner on the market.

I certainly don't know the answer to that. Where is Motown Spartan when you need him? Gallivanting around London.

First nickel, now cocoa. The commodities world is again being rocked by a short squeeze.

Why it matters: Just as with nickel in 2022, arcane financial contracts are taking on a life of their own and hurting those you'd think the price spike would help — companies that own large amounts of cocoa.

https://www.axios.com/2024/03/28/cocoa-short-squeeze-explained

by **Floyd Robertson** Thu Mar 28, 2024 11:51 am

Americans are more confident inflation is on the decline

Consumers are feeling increasingly confident that inflation will continue falling.

On Thursday, the latest University of Michigan survey showed consumers expect inflation to fall to 2.9% in the next year, down from expectations of 3% seen during February. Expectations for long-run inflation were 2.8%, down from the 2.9% seen a month prior.

The one-year inflation projections are in a range seen in 2018 and 2019, before the fallout from the pandemic in 2020 sent inflation to a 40-year high.

"Consumers exhibited confidence that inflation will continue to soften," Survey of Consumers director Joanne Hsu said in a release.

by **Motown Spartan** Thu Mar 28, 2024 3:04 pm

Trapper Gus wrote:
Floyd Robertson wrote:OK, not going to lie, this one is going to hit hard.

Cocoa Breaks $10,000 Record, With Pricier Chocolate to Follow

F'in Bidenomics.

“When we’re at this price, it’s hard to tell whether these prices are justified,” said Paul Joules, an analyst at Rabobank in London. “Whenever we have a dip in the market, it seems to shoot straight back up, which is more to do with the commercials, they’ve been net buyers.”

If I understand this, highly unlikely that I do, it sounds like speculators have a corner on the market.

I mean, all futures contracts are done by speculators, by definition. So, yeah, I guess they have a corner on the market.

by **Trapper Gus** Thu Mar 28, 2024 4:47 pm

Motown Spartan wrote:
Trapper Gus wrote:

If I understand this, highly unlikely that I do, it sounds like speculators have a corner on the market.

I mean, all futures contracts are done by speculators, by definition. So, yeah, I guess they have a corner on the market.

Not exactly as growers use them as insurance on the crop they are growing.

by **Motown Spartan** Thu Mar 28, 2024 5:00 pm

Trapper Gus wrote:
Motown Spartan wrote:

I mean, all futures contracts are done by speculators, by definition. So, yeah, I guess they have a corner on the market.

Not exactly as growers use them as insurance on the crop they are growing.

At the end of the day they are speculating that the price movement will benefit them based on the future price they agree to. They may have to sell their product for less than market, or they may be able to profit off of the contract.

It’s all speculation.

by **kingstonlake** Thu Mar 28, 2024 5:49 pm

46% of NE Michigan households are either poor or struggling.

https://www.truenorthradionetwork.com/news/ne-mi-has-highest-child-poverty-rate-nearly-46-of-households-are-either-poor-or/article_b34a4714-ece7-11ee-97dd-cf24ebe2c2c0.html

by **Trapper Gus** Thu Mar 28, 2024 6:18 pm

Motown Spartan wrote:
Trapper Gus wrote:

Not exactly as growers use them as insurance on the crop they are growing.

At the end of the day they are speculating that the price movement will benefit them based on the future price they agree to. They may have to sell their product for less than market, or they may be able to profit off of the contract.

It’s all speculation.

For a farmer selling below production costs means going out of business, eventually, so it's more about insurance...you can call it speculation if you like

by **Motown Spartan** Thu Mar 28, 2024 6:38 pm

Trapper Gus wrote:
Motown Spartan wrote:

At the end of the day they are speculating that the price movement will benefit them based on the future price they agree to. They may have to sell their product for less than market, or they may be able to profit off of the contract.

It’s all speculation.

For a farmer selling below production costs means going out of business, eventually, so it's more about insurance...you can call it speculation if you like

That would be the stupidest thing in the world and no one would do that.

What I am saying, and how futures work, is this:

A producer agrees to sell a product X for let’s say $15 on June 1.

On June 1, the market price of X is $12. So, the producer wins

However, let’s say on June 1 the price is $20. The producer got his $15 but he could have gotten $20.

And vice versa for the buyer. He could have paid $12, but had to pay $15. Or, he will only pay $15 when he could have paid $20.

A futures contract allows an investor to speculate on the direction of a security, commodity, or financial instrument, either long or short, using leverage.

by AvgMSUJoe Thu Mar 28, 2024 7:34 pm

kingstonlake wrote:46% of NE Michigan households are either poor or struggling.

https://www.truenorthradionetwork.com/news/ne-mi-has-highest-child-poverty-rate-nearly-46-of-households-are-either-poor-or/article_b34a4714-ece7-11ee-97dd-cf24ebe2c2c0.html

Is that new?

Either you are visiting or poor... Hard to work when their are zero jobs.

by **Trapper Gus** Thu Mar 28, 2024 7:44 pm

https://www.ers.usda.gov/amber-waves/2020/november/corn-and-soybean-farmers-combine-futures-options-and-marketing-contracts-to-manage-financial-risks/

by **Motown Spartan** Fri Mar 29, 2024 3:17 am

Trapper Gus wrote:https://www.ers.usda.gov/amber-waves/2020/november/corn-and-soybean-farmers-combine-futures-options-and-marketing-contracts-to-manage-financial-risks/

Yeah, as the article describes precisely as I did above, they’re speculating.

In addition to the speculation of a futures contract, they’re using puts as an insurance policy. If the price doesn’t go as plan, they have the downside protection of the put. If the price goes as planned, the put is never exercised and they lose the cost of the put.

by **Trapper Gus** Fri Mar 29, 2024 7:45 am

Motown Spartan wrote:
Trapper Gus wrote:https://www.ers.usda.gov/amber-waves/2020/november/corn-and-soybean-farmers-combine-futures-options-and-marketing-contracts-to-manage-financial-risks/

Yeah, as the article describes precisely as I did above, they’re speculating.

In addition to the speculation of a futures contract, they’re using puts as an insurance policy. If the price doesn’t go as plan, they have the downside protection of the put. If the price goes as planned, the put is never exercised and they lose the cost of the put.

Using that usage of the the idea someone who buys and sells anything is executing a form of speculation.

Farmers are protecting the floor of profitability for their business.

It has been written that some of the largest buyers and sellers of oil futures are oil producers, for similar reasons.

by **Motown Spartan** Fri Mar 29, 2024 7:53 am

Trapper: you’re right, I concede.

Everyone else: Futures are speculation, by definition.

by **Trapper Gus** Fri Mar 29, 2024 8:08 am

Motown Spartan wrote:Trapper: you’re right, I concede.

Everyone else: Futures are speculation, by definition.

We are posting at cross purposes, I conceded before you did, FWIW, which is nothing.

My only point was that farmers speculate with a particular purpose, and are speculating not on the value of the futures, like a pure future speculators do, but on something they already will have physical possession of, their crops.

by **Trapper Gus** Fri Mar 29, 2024 9:08 am

https://wolfstreet.com/2024/03/28/resurging-corporate-profits-show-inflationary-pressures-are-reheating-after-lull-by-major-industry/

by **Trapper Gus** Fri Mar 29, 2024 10:55 am

Feds favorite inflation measure is 2.5% year over year for Febuary.

https://apnews.com/article/inflation-prices-election-federal-reserve-rates-economy-1e44dbd90769dbe968fd6ee702c7006a

by **kingstonlake** Wed Apr 24, 2024 10:04 am

Is credit card debt the first Domino to fall? Will the housing market follow for people who over bought because of low interest rates?

People appear to be financing the effects of (non-existent)inflation with credit.

https://www.philadelphiafed.org/surveys-and-data/2023-q4-large-bank

Credit card performance further deteriorated at the end of 2023, with firms recording the worst 30+, 60+, and 90+ account-based days past due levels in the reporting series. Notably, card performance usually declines in the fourth quarter. Stress among cardholders was further underscored in payment behavior, as the share of accounts making minimum payments rose 34 basis points to a series high from last quarter’s reading.

by TravelinMan Wed Apr 24, 2024 10:08 am

kingstonlake wrote:Is credit card debt the first Domino to fall? Will the housing market follow for people who over bought because of low interest rates?

People appear to be financing the effects of inflation with credit.

https://www.philadelphiafed.org/surveys-and-data/2023-q4-large-bank

Don't worry, Uncle Joe will bail them out.

by **Trapper Gus** Wed Apr 24, 2024 10:15 am

kingstonlake wrote:Is credit card debt the first Domino to fall? Will the housing market follow for people who over bought because of low interest rates?

People appear to be financing the effects of (non-existent)inflation with credit.

https://www.philadelphiafed.org/surveys-and-data/2023-q4-large-bank

Credit card performance further deteriorated at the end of 2023, with firms recording the worst 30+, 60+, and 90+ account-based days past due levels in the reporting series. Notably, card performance usually declines in the fourth quarter. Stress among cardholders was further underscored in payment behavior, as the share of accounts making minimum payments rose 34 basis points to a series high from last quarter’s reading.

Not sure I'm reading this right, however as far a credit cards, it sounds like the amounts on them are still below what they were in 2019.

Inflation should be helping people who bought before the Fed started rising rates as wages have risen while the mortgages taken out in the low interest rate era have not.

There is nothing in that report on how existing mortgages have been monetized and how those monetized mortgage instruments have been insured, which was the big thing that caused the 2008 crash.

edit - credit cards becoming stretched is one of the indicators of a pullback in consumer spending, which is one of the indicators of a possible oncoming recession.

by **Trapper Gus** Wed Apr 24, 2024 10:18 am

TravelinMan wrote:
kingstonlake wrote:Is credit card debt the first Domino to fall? Will the housing market follow for people who over bought because of low interest rates?

People appear to be financing the effects of inflation with credit.

https://www.philadelphiafed.org/surveys-and-data/2023-q4-large-bank

Don't worry, Uncle Joe will bail them out.

Probably, as that was one of the mistakes Obama made in 2009 which helped cause the red wave in 2010. Not helping the average guy as he bailed out the banks & insurance companies, that is. Joe knows that.

by Spartans4Life Wed Apr 24, 2024 12:39 pm

TravelinMan wrote:
kingstonlake wrote:Is credit card debt the first Domino to fall? Will the housing market follow for people who over bought because of low interest rates?

People appear to be financing the effects of inflation with credit.

https://www.philadelphiafed.org/surveys-and-data/2023-q4-large-bank

Don't worry, Uncle Joe will bail them out.

The dirty old child sniffer in the White House could forgive all debt, right? Imagine how much money would enter the economy is he wiped away all mortgage, auto and credit card debt!! What better way to get elected than to buy votes?

by **Cameron** Wed Apr 24, 2024 4:35 pm

Lots of federally held credit card debt, is there?

by **Trapper Gus** Wed Apr 24, 2024 9:31 pm

https://rooseveltinstitute.org/2023/11/15/a-victory-lap-for-the-transitory-inflation-team/

by AvgMSUJoe Wed Apr 24, 2024 9:49 pm

Spartans4Life wrote:
TravelinMan wrote:

Don't worry, Uncle Joe will bail them out.

The dirty old child sniffer in the White House could forgive all debt, right? Imagine how much money would enter the economy is he wiped away all mortgage, auto and credit card debt!! What better way to get elected than to buy votes?

And trumps give-a-way to billionaires?

by **Trapper Gus** Fri Apr 26, 2024 9:56 am

So this hyperventilating about inflation numbers of 2.5% to 2.8% by the Fed and all the financial markets when for most of the pre 2008 crash years the Fed, under Greenspan, would have killed its mother to have so low a number, is just such a fascinating example of group think...

https://apnews.com/article/inflation-prices-election-federal-reserve-rates-economy-f54d6af95e3eef434bddb72d25e3decf

by **kingstonlake** Fri Apr 26, 2024 10:03 am

It’s so cute when people justify something bad by finding something more bad.

Ya know….. more people were killed in WWII than in Afghanistan, right?

by **Trapper Gus** Fri Apr 26, 2024 10:14 am

Inflation in the 2% to 3% range isn't "bad" for the economy per say.

The price gouging, ongoing by corporations is causing the economy to not be maintaining a balance between stored value, called capital, and dynamic value, called labor. The Fed isn't trying to fix that, in fact higher interest rates are doing the opposite as capital at higher interest rates has more return, and grows at a faster rate.

by **Floyd Robertson** Fri Apr 26, 2024 10:24 am

I find it effing hilarious that yesterday Wall St shit a brick because GDP show signs of slowing down. Ya know what's slowing it down? Your effing corporate greed that's keeping inflation above preferred levels.

by **Trapper Gus** Fri Apr 26, 2024 11:36 am

Floyd Robertson wrote:I find it effing hilarious that yesterday Wall St shit a brick because GDP show signs of slowing down. Ya know what's slowing it down? Your effing corporate greed that's keeping inflation above preferred levels.

The smart money of Wall Street makes money on playing against the direction of the market, not on the price of stocks going up themselves.

There is a multi-year play ongoing in residential real-estate which is causing price gouging on rents and house values.

Thom Hartman (I know, I know) lays it out as part of this rant on homelessness...

https://hartmannreport.com/p/why-homelessness-stalks-america-like-866

by **kingstonlake** Mon Apr 29, 2024 2:37 pm

43% of small businesses couldn’t pay Aprils rent.

It was 30% in January 2023

https://www.bnnbloomberg.ca/us-small-business-rent-delinquencies-rise-to-a-three-year-high-1.2065864.amp.html

by **Travis of the Cosmos** Mon Apr 29, 2024 2:42 pm

Sniff test says that seems high

by **kingstonlake** Mon Apr 29, 2024 2:55 pm

Travis of the Cosmos wrote:Sniff test says that seems high

Restaurants hardest hit. Excluding restaurants it was 20%

Still not a good trend to be at a three year high.

Oh, and wait for it…..

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