Why Inflation Is Yesterdays News

 I love it when all of Wall Street, the Fed, and the media agree; INFLATION!!

WAIT,  wasn't that long ago we had to super size the STIMULUS . Was that a bit overdone? The market did crash right or am I imagining that?

 If you asked the 50% of  US households below the mean income of $60g's per yr..the stimulus was probably just right ...got to pay bills, buy cars and laptops...participate in the American Dream for 18 mo.s ...but I digress or do I?

The marginal propensity of lower and middle income households to consume likely doubled, but that is now long gone.  

AND for most of the rest ....wait till they get their Q2 Statements.  

Commodity markets are already reflecting this reality. 

Starting with GASOLINE, everyone's favorite complaint. 

Monthly Bars

 

The red arrows are on May. I wish I was that regular.
Retail prices OF COURSE will lag.

 

 

 

 

 

A closer look reveals that prices HAVE ALREADY come down almost $1.00. Not retail of course.

 30 Min Bars

 

 

 

 

 

 

 

 

 

Next up Wheat

 Daily Bars

Down about 30% from the highs and at the low side of  the last 3 mo.s range.

 

 

 

 

 

 

 

How bout Copper? Big industrial component right?

 


And last but not least NG which of course is a component of the summer AC/ utility bill. 

In this case the US consumer got a little help via an LNG facility outage for the summer season.

Weekly Bars

 Note the circled move represents Ukraine/Russia driven export demand pressure. 

Additionally GDP is I believe pumped up with excess inventories.

Next up:  HARD TO PORT Full steam ahead!

Oh did we mention the USD strength and generally tighter Central Banks globally.?

Maybe the anomalous events will keep on comin but this is a reaction to a reaction to an action. Like being at the helm of a boat, an ever lighter hand will most likely get the ship back on course.

 

 








 

 

 

 

 

 

 


Comments

Post a Comment

Popular posts from this blog

WTI Update- a 4 Handle Future?

Image
From my last post Dec 28, " Before we get into next year, short term the WTI has a good deal of upside risk to between $48 and $54, with $51.50 being my favorite cluster of resistance/ and a measured target for a 4th wave." Hourly click to enlarge As can be seen, WTI is in the high side of that range and evidencing some recent weakness. It does have a "look" that could produce a higher high at the top end of the range there, or even somewhat higher.  However the greater risk, short and medium term is to the downside from here.  It may turn out that a "b" wave chop down is in the cards with a subsequent "c" wave up,  but that kind of move can be deep and retest the lows . See above Fib retracements, particularly the .618 and .78  Longer Term Risk For Bulls AND Bears The Decline click to enlarge While the labeling of the subwaves above can be argued,  including whether the wave down is completed yet or not,   the $
Read more

Biden Climate Plan and Global GDP

Image
 KUDOS, and I mean it, to Biden. Real implementation will be incredibly difficult and failure will mean doom (don t think your grandchildren are going to survive in a world without plankton).  By next election cycle the path the world is on will be visible to all and most likely we will see spiking carbon emissions, devastating weather catastrophes, the need for even more investment, carbon taxes, and even more weaponizing of painful choices.  The pandemic definitely decreased global emissions. To stay under the limit on future emissions needed to keep climate temps under the 1.5 centigrade increase, that same decrease in emissions Y on Y has to be achieved every year until 2030. Reality No.1)  Co2 and other greenhouse gas emissions have a very high correlation w Global GDP, .87 to .93 Climate change is unfortunately global so don t bother with arguments based on regional data. In the United States some progress growing GDP while cutting emissions has been achieved in some locales. Mos
Read more

Gasoline a By-product of Distillate

From FT Energy... US petroleum stocks fit for bursting Posted by Izabella Kaminska on Jan 14 11:45. Weekly US energy inventory data release on Wednesday confirmed the unbelievable. US petroleum stocks rose in the week despite especially cold weather in the region during the period. Meanwhile, Dennis Gartman of the Gartman Letter draws attention to the fact that aggregate inventory rose by 8.9m barrels, amongst the largest weekly aggregate increase ever. More absurdly still, gasoline stocks are now at levels not seen in two years — some 10m barrels higher than they were last year....... The market responded to the disconnect between distillate and gasoline demand by storing the former offshore in floating storage. This is easily done for distillates. But now that we’ve seen a bit of a pickup in demand for distillates because of the weather, a potential surplus of gasoline has been produced. And, unlike distillates, gasoline is not easily stored offshore. Hence the probab
Read more