Economic implications of a SARS/Coronavirus outbreak

[moXJO]

Cross-post:


Aaaaaand the inflation data is in:

View attachment 134085

Futures gone nuts everywhere about 0.5% in response, banks the best, everything's green as this was already priced in (because of course it was, you'd have to be an idiot not to think we were going to see numbers like this) but the best place to be with inflation is of course crypto, and most of that has run about twice as much as equities.


As far as an economic consequence, real wages have dropped. Wage growth is not keeping up with inflation.

Which, if you know anything about fractional reserve banking/fiat currency systems, should not surprise you in the slightest either.

Was the way they measured inflation tweaked during Obama?

Guys are saying that in reality it's closer to 16%

 

[over9k]

Was the way they measured inflation tweaked during Obama?

Guys are saying that in reality it's closer to 16%

They've been fudging it since long before then.

There is a company (I forget who, one of those private intel mobs) that measures it by the old method and yes it's way above the official stats.

Changing how a metric is measured every time it starts getting unfavourable is not a new trick.

 

[moXJO]

They've been fudging it since long before then.

There is a company (I forget who, one of those private intel mobs) that measures it by the old method and yes it's way above the official stats.

Changing how a metric is measured every time it starts getting unfavourable is not a new trick.

Correct it's decades old. I think the latest was under Obama. Australia has done similar. Reportedly some of the food is up by 30+%

From start of covid I've watched some building materials raise a couple hundred percent. It's definitely running higher across a basket of goods.

 

[wabullfrog]

Ordered an LPG cylinder today, price has gone up by 10% since last order in early September

 

[over9k]

PPI numbers are in and they are BAD:




So we should all know the story now - NDX futures plummeted on the news, spy next worst, then dow:



The difference is that crypto is "only" up 2-4% and bonds haven't run that hard because this omicron variant is (now) playing merry hell with things.

So high inflation plus lockdowns & drops in economic activity give us red everywhere - stagnant economy but prices inflating anyway is as bad as it gets.

Crypto still in the green (slightly) so the best of a bad bunch.



You really have to think about an equities market only moving about 0.5% in response to a 9.6% PPI movement. If we go with estimates, a 9.2% move was already priced in.

I know a lot of that is base effect on account of the vaccine rollout only beginning late november of last year, but still...

 

[over9k]

Just in case anyone's wondering if the swing play rules aren't still applying.

(they are)

 

[over9k]

My error there, I should have been more specific in the original post....

Off that subject though and looking at economic effects more broadly, the latest one seems to be concern about running short of urea.

Urea being used as an agricultural input as fertilizer plus along with demineralised water it's used as diesel exhaust fluid (DEF, more commonly known by the brand name AdBlue). Now the problem there is that whilst the purpose of DEF is to reduce exhaust emissions of NOx, machinery is programmed so that it can't be used without it. No DEF and the engine goes into limp mode.

Now it seems that there's a shortage of urea so that's going to further add to the supply chain woes if it means trucks stop running, farm machinery stops and so on. Plenty about it in the media and elsewhere at the moment.

AdBlue shortage spells imminent diesel crisis

The looming shortage of diesel exhaust fluid has transport bodies and governments scrambling to prevent a significant supply chain emergency.

www.primemovermag.com.au

Supply chain crisis could force cars off roads

The supply chain crisis wreaking havoc across the globe is set to step up a notch, amid reports a disastrous shortage could soon force everyday Aussie motorists off the road.

www.news.com.au

Updating this post, apparently panic buying has now set in and a run has begun on it like any run on anything else (a bank, toilet paper etc).

 

[over9k]

Alright so here's one for the econ students or the guys without any kind of formal training, why would we see a divergence like this:



Hint: Remember that companies almost across the board are posting record profits, so the difference is not being absorbed by the companies.

 

[greggles]

Alright so here's one for the econ students or the guys without any kind of formal training, why would we see a divergence like this:

I would say that the CPI numbers do not represent the actual price inflation that has occurred from the consumer's perspective, and are in fact understating them. The PPI is probably the more accurate figure while the CPI numbers are fudged.

 

[over9k]

I would say that the CPI numbers do not represent the actual price inflation that has occurred from the consumer's perspective, and are in fact understating them. The PPI is probably the more accurate figure while the CPI numbers are fudged.

Correct. However there's more than one contributing factor. Can you think of anything else?

Remember that the cpi is the ppi with another metric added on top of it. Your answer lies within that metric.

 

[wayneL]

Wage growth?

 

[over9k]

Wage growth?

Bingo.



That difference is coming out of wages, not profits.

To complete this sorry picture, it's not like it's all wages either. It's only the low income earners getting hosed:



And the end result?

 

[over9k]

For all the technical types, the r2k has just hit support again:



I've grabbed a small amount just to see if the prophecy self-fulfils.

Aside from that, just more omicron carryon. Bit of a slow news day. Looking like a red week overall, but a nice swing play yesterday.

 

[over9k]

Good post. Also worth noting which products usually get refined into what daughter products vs the alternatives when the primary unrefined supply dries up.

Some things you can make with gas if you can't get oil, some you can make with oil if you can't get gas, some can only be made with one but not the other, so on and so forth. The overwhelming majority of stuff only uses gas if there's no other choice on account of gas being so much more difficult to transport than oil.

A big one for inflation is fertiliser.

 

[over9k]

Expected fed taper has been doubled in a huge sign of confidence, everything's flipped deep into the green except bonds obviously, yield curve's flattened, jolly good show.

Forward guidance is three interest rate hikes next year.

 

[over9k]

These types of headlines are just comical at this point.

 

[wayneL]

@over9k does anyone other than unsophisticated plebeians believe this shyte from CBs? Are the finance types just playing along until the music stops?

It seems to me only a few actually have their fingers on the pulse, rather than trying to make ridiculous calls that end up wrong almost all the time?

 

[over9k]

@over9k does anyone other than unsophisticated plebeians believe this shyte from CBs? Are the finance types just playing along until the music stops?

It seems to me only a few actually have their fingers on the pulse, rather than trying to make ridiculous calls that end up wrong almost all the time?

They wouldn't be the first authority that didn't want to admit that their control of a particular situation was, shall we say, limited. Remember that confidence is everything at a macro level. And that's before we even start with the competence angle (do you really think that they know what's going to happen/can see the future?).

Larry summers has been throwing bombs from the sidelines/voicing his opinion as loud as he has been for a reason.

Even in the private sector, I live in a near constant state of astonishment at just how utterly clueless so many "professional" money managers are, and we're talking people in charge of staggering sums of money in super funds etc. If you haven't at least 5x'd your money in this pandemic then you haven't even so much as beaten an index etf:




I manage my own money (and I've now had friends give me 5 figure sums of their own money) for a reason. I post up everything I do in this thread for that same reason as it doesn't cost me anything to help you guys beat the market as well.

Even something as simple as doing nothing but buying a leveraged index etf like SPXL or TQQQ and not making a single trade in 18 months makes the so called "actively" managed funds look like the absolute hacks that they are and I've made considerable effort to point that out in this thread too.

Last week alone netted 25% doing literally nothing but buying TQQQ on red and selling on green. That's it. Buy on a red day, sell on a green one. That's three years' returns for a super fund in normal market conditions done in a WEEK.


tl;dr most of the people in charge are incompetent, water also confirmed wet.

 

[over9k]

The other thing is that, like janet yellen, there's no shortage of utterly useless diversity hires getting more and more power nowadays:



Which is a problem that is not going to get better either.

 

[Smurf1976]

@over9k does anyone other than unsophisticated plebeians believe this shyte from CBs? Are the finance types just playing along until the music stops?

I concluded long ago that being right at the top of the tree is something where the main required skill is not economics or a seemingly relevant field such as math but rather it's acting.

An ability to stand outside in gale force winds with torrential rain commenting on what a pleasant sunny day it is while remaining completely serious and giving no indication that you've even noticed the wind and rain. The sort of thing that a decent actor can do well but where the average person would just burst out laughing.