Inflation

[qldfrog]

Is Gold a Hedge against INFLATION?

Historically yes, but we live in strange times

 

[wayneL]

Is Gold a Hedge against INFLATION?

Long term, yes, if bought at/near intrinsic value. Short term, no.

 

[over9k]

The headlines of the week are all looking at the "Imminent Ukrainian Counterattack," and while there are many reasons to expect action from both sides....let's focus on the inevitables for today.

We've seen the Russians struggling to hit their targets thanks to upgrades to the Ukrainian defense capabilities. So we'll likely see the Russians pivot from targeting power infrastructure to something new...

While not perfect, the Black Sea export initiative did have some successes. By the EU’s counting, some 23 mmt of grain—mostly corn and wheat—were exported, helping the Ukrainians clear the backlog of their bumper 2020/2021 harvest. But the good news ends there. Ukraine has lost at least 15% of its grain storage capacity to the war, and much of its sunflower-crushing facilities are either inaccessible due to occupation or loss of infrastructure or destroyed. This means Kyiv, when able, will likely have to focus on exporting bulk sunflower seeds rather than higher-value sunflower oil.

Unfortunately, the Black Sea grain export deal brokered by the UN and Turks expires May 18th and is unlikely to be revived anytime soon. Expect the Russians to switch their focus to agricultural infrastructure. Targets like this are much harder to defend, and this will likely mark the beginning of the end of any meaningful food exports coming out of Ukraine.

On the Ukrainian side, they have all the supplies and weaponry ready to launch a counter-offensive, but there's still a few feet of mud keeping anything from happening. I wouldn't expect a ton of action from either side this month, but it's coming soon.

 

[waterbottle]

The headlines of the week are all looking at the "Imminent Ukrainian Counterattack," and while there are many reasons to expect action from both sides....let's focus on the inevitables for today.

We've seen the Russians struggling to hit their targets thanks to upgrades to the Ukrainian defense capabilities. So we'll likely see the Russians pivot from targeting power infrastructure to something new...

While not perfect, the Black Sea export initiative did have some successes. By the EU’s counting, some 23 mmt of grain—mostly corn and wheat—were exported, helping the Ukrainians clear the backlog of their bumper 2020/2021 harvest. But the good news ends there. Ukraine has lost at least 15% of its grain storage capacity to the war, and much of its sunflower-crushing facilities are either inaccessible due to occupation or loss of infrastructure or destroyed. This means Kyiv, when able, will likely have to focus on exporting bulk sunflower seeds rather than higher-value sunflower oil.

Unfortunately, the Black Sea grain export deal brokered by the UN and Turks expires May 18th and is unlikely to be revived anytime soon. Expect the Russians to switch their focus to agricultural infrastructure. Targets like this are much harder to defend, and this will likely mark the beginning of the end of any meaningful food exports coming out of Ukraine.

On the Ukrainian side, they have all the supplies and weaponry ready to launch a counter-offensive, but there's still a few feet of mud keeping anything from happening. I wouldn't expect a ton of action from either side this month, but it's coming soon.

I'll get reported to HR if I keep watching Peter Zeihan doom pr0n.

In other news, there are different types of recession.

'It is here': Official data confirms Australia in a 'consumer recession'

Australians are buying significantly fewer goods at shops and department stores, new Australian Bureau of Statistics data show.

www.abc.net.au

 

[wayneL]

Australian gas prices highest in the world now. Just WTF?

First place! Australia has the highest gas price in world

Why I am the only person in Australia to write about gas today is a mystery I will leave to you. The gas cartel continues to openly break the law and smash supply commitments, as well as price caps, with prices still 50% higher than they are supposed to be: Asian prices are hovering around

www.macrobusiness.com.au

 

[mullokintyre]

BOE have hiked interest rates for the 12 consecutive time, this time by 25BP's.
FromZero Hedge

The hike, which was expected by the market, was voted through by a 7-2 majority with Dhingra and Tenreyro voting for unchanged, as the ce
The latest BoE forecasts did not attempt to push back against financial market expectations that there were more rises in the cost of borrowing to come and rates would peak close to 5%, according to the FT.

The BoE revised its short term inflation forecasts significantly higher as it admitted it had previously underestimated the strength and persistence of food price rises. Instead of inflation falling below its 2 per cent target within a year, as it previously forecast, the BoE now thinks it will hit the target only at the start of 2025, after the latest date of the next general election. It now expects inflation to fall from the current 10.1 per cent rate to 5.1 per cent in the fourth quarter of the year, instead of its previous forecast of 3.9 per cent. Any further deterioration in the inflation outlook would leave UK prime minister Rishi Sunak missing his pledge to halve inflation by the end of the year.

However, the forecast also predicted the biggest GDP forecast upgrade on record and, unlike the Fed, the bank now thinks the UK economy will avoid a recession relatively comfortably, forecasting that by mid-2026 gross domestic product will be 2.25 per cent larger than it expected in February.

And while the BoE thinks food price inflation will no longer be driving overall price rises in a year’s time, it now expects that the general improvement in the economic outlook will mean that inflation will be above target subsequently.
ntral bank’s Monetary Policy Committee said the rise was needed to bring inflation back under control.

So it does not look like the BOE are going to pivot any time soon based on their pronouncements.
But we all know that can change very quickly.
mick

 

[SirRumpole]

Chances of recession in Australia by 2023 now 80% says RBA.

RBA research puts Australian recession risk at up to 80 per cent by 2024

Previously unpublished internal research from the Reserve Bank estimates that Australia's risk of recession over this year and next could be as high as 80 per cent.

www.abc.net.au

 

[waterbottle]

Chances of recession in Australia by 2023 now 80% says RBA.

RBA research puts Australian recession risk at up to 80 per cent by 2024

Previously unpublished internal research from the Reserve Bank estimates that Australia's risk of recession over this year and next could be as high as 80 per cent.

www.abc.net.au

Don't know how you can justify keeping inflation high for years when you've been arguing that it's the worst economic bogeyman for the past few months.

 

[over9k]

I'll get reported to HR if I keep watching Peter Zeihan doom pr0n.

In other news, there are different types of recession.

'It is here': Official data confirms Australia in a 'consumer recession'

Australians are buying significantly fewer goods at shops and department stores, new Australian Bureau of Statistics data show.

www.abc.net.au

No but I'm thinking there's going to be a correlation between action in the war & energy prices (even just perceived).

Lots of war stuff happens, people shite themselves, they order gas/oil now to secure their supply in X months, futures thus soar.

 

[waterbottle]

US unemployment claims starting to trend upwards. Usually the precursor to recession hmmmmm

 

[over9k]

Cash & degen still the only plays.

 

[over9k]

US unemployment claims starting to trend upwards. Usually the precursor to recession hmmmmm

But what type of recession?

 

[Dona Ferentes]

US unemployment claims starting to trend upwards. Usually the precursor to recession hmmmmm

Historically, and often , commentators and policymakers say that its the change in unemployment numbers that are a key trigger , and closely watched.

 

[waterbottle]

But what type of recession?

I don't know enough to answer that

 

[waterbottle]

View attachment 156872

Cash & degen still the only plays.

Dunno, crypto is my bellwether for risk plays and it's just started to crack recent lows

 

[Dona Ferentes]

An unsoph has written

Cash & degen still the only plays

But collective wisdom / groupthink is trending the other way:

Wall Street traders are gaming out what could be a rare Black Swan event. In the options market, hedges against a volatility breakout are seeing the most demand in five years. The cost to protect against a market sell-off of around 10 per cent, or one-standard deviation, is the highest in a year..

And this can be, another bank collapse or a debt ceiling non-blink;

Unfortunately, T-bills are the worst place to be if you think there is any likelihood that the government will default.

.. I can tell you that I personally have removed my money from money market funds, and I am holding it in cash until the debt ceiling is resolved. I am costing myself a little bit in terms of interest but gaining peace of mind. And if you know my shtick about personal finance, you know that I always do the thing that results in less stress. I don’t want to be up late at night on May 31, refreshing the browser on my laptop seeing if my T-bills are going to mature at par.

..The statistical probability is higher than ever. US 1-year CDs are implying about a 4% probability of default. As I write, four-week bills are up about 13 basis points on the day. The market is taking this seriously, even if you are not.

 

[over9k]

I don't know enough to answer that

I was more referring to the spin the authorities are now putting on everything.

 

[divs4ever]

I don't know enough to answer that

don't worry they will change the definition to something 'voter-friendly'

 

[divs4ever]

@Dona Ferentes
Unfortunately, T-bills are the worst place to be if you think there is any likelihood that the government will default.

i would have thought so as well , , but others seem to disagree , if the US opts for a default , i would guess they would go for a soft one where the bill maturities would be extended until the appropriate laws are passed

recent history would suggest this is all brinkmanship but it could actually be different this time

 

[waterbottle]

If the US opts for any sort of default, surely that would drive interest rates higher?

Could be a good political move and would help the Fed save face