Inflation

[Dona Ferentes]

This is the chatter at the moment.

from one of my reads:

"July ... they all start[ed] repeating the soft landing /no recession narrative around that time.

"As ever the narrative fits the positioning. Between you and me I don’t believe any of this narrative.

"I also place an astonishingly low degree of confidence in the Fed’s economic projections.

"Watch and hear the narrative shifting soon:
Oil prices.
Fiscal crowding out.
An acknowledgement that Europe is in serious trouble.
Stagflation will soon be the buzzword of the moment. ..."

 

[over9k]

Deflation.

Because the demand side is going

 

[Dona Ferentes]

Bill Ackman says he's shorting 30-year Treasury bills, and yields could hit 5.5% 'soon'

Billionaire investor Bill Ackman says bond market may reprice the long end of the curve "in a matter of weeks."

www.cnbc.com

still with the same theme... X marks the spot

@BillAckman

"I believe that long-term rates, e.g, 30-year rates, will rise further from here. As such, we remain short bonds through the ownership of swaptions. The world is a structurally different place than it was. The peace dividend is no more. The long-term deflationary effects of outsourcing production to China are no more. Workers and unions’ bargaining power continues to rise. Strikes abound, with more likely to come as successful walkouts achieve substantial wage gains.

"Energy prices are rising rapidly. Not refilling the SPR was a misguided and dangerous mistake. Our strategic assets should never be used to achieve short-term political objectives. Now we must refill the SPR while OPEC and Russia cut production. The green energy transition is and will remain incalculably expensive. And higher gas prices will raise inflationary expectations. Just ask your average American. They see the prices at the pump and in the grocery store and don’t believe inflation is moderating.

"Our national debt is $33 trillion and rising rapidly. There is no sign of fiscal discipline by either party or by the presumptive presidential nominees. And each debt ceiling is an opportunity for our divided government and its most extreme actors to get media attention, and for our nation to threaten default. This is not a good way to recruit the many new buyers we need for our bonds. The government is selling hundreds of billions of bills, notes and bonds weekly. China and other foreign nations, historically major buyers of our debt, are now selling. And the QT unwind experiment has barely begun. Imagine trying to do a massive IPO where the underwriter, insiders and short sellers are all selling at once, competing to hit every bid on the way down while the analysts downgrade their ratings to ‘Sell.’

"Our economy is outperforming expectations. Major infrastructure spending is beginning to contribute to economic growth and the supply of additional debt. Recession predictions have been pushed out beyond 2024. The long-term inflation rate is not going back to 2% no matter how many times Chairman Powell reiterates it as his target. It was arbitrarily set at 2% after the financial crisis in a world very different from the one we live in now. I bumped into the CIO of one of the world’s largest fixed income asset managers the other night and asked him how it was going. He looked like he had had a tough day. He greeted me by saying: ‘There are just too many bonds’ — a veritable tsunami of new issuance each week. I asked him what he was going to do about it. He said: ‘The only thing you can do is step away.’ I have been surprised at how low long-term rates are. I think the best explanation is that bond investors thought of 4% as a high rate of interest because rates hadn’t breached 4% for nearly 15 years.

"When investors saw the ‘opportunity’ to lock in 4% for 30 years, they grabbed it as a ‘once-in-their-career opportunity,’ but today’s world is very different from the one they have experienced up until now. The long-term inflation rate plus the real rate of interest plus term premium suggests that 5.5% is an appropriate yield for 30-year Treasurys. And query whether 0.5% is a sufficient real long term rate in an increasingly risky world. And the technicals could cause yields to go even higher, particularly in the short term. We saw the beginnings of that today. It wasn’t that long ago that a previous generation thought five percent was a low rate of interest for a long-term, fixed-rate obligation.

"But I could be wrong. AI might save us."

 

[sptrawler]

IMO the question for Australian's is, where does our dollar end up at.

 

[Knobby22]

IMO the question for Australian's is, where does our dollar end up at.

A lower $A would be good for exports and keeping our current account deficit positive, allowing for the promised tax cuts.

 

[sptrawler]

A lower $A would be good for exports and keeping our current account deficit positive, allowing for the promised tax cuts.

It will be interesting to see if the tax cuts happen IMO.

 

[divs4ever]

A lower $A would be good for exports and keeping our current account deficit positive, allowing for the promised tax cuts.

good luck getting those tax cuts no matter how the account balances look

( but yes a lower dollar helps exports but harm those who borrowed internationally )

 

[sptrawler]

A lower $A would be good for exports and keeping our current account deficit positive, allowing for the promised tax cuts.

good luck getting those tax cuts no matter how the account balances look

( but yes a lower dollar helps exports but harm those who borrowed internationally )

Also bad for inflation, everything that comes in from overseas costs more, which means just about anything from shoes, clothing to electronic goods, white goods etc.
It hammers those who can least afford it, as they have the least amount of avenues to improve their financial position, more collateral damage.
Still it helps the competition, for the jobs at the bottom end of the food chain.

 

[divs4ever]

Also bad for inflation, everything that comes in from overseas costs more, which means just about anything from shoes, clothing to electronic goods, white goods etc.
It hammers those who can least afford it, as they have the least amount of avenues to improve their financial position, more collateral damage.
Still it helps the competition, for the jobs at the bottom end of the food chain.

but reducing self-sufficiency is an Australian policy decision that can be reversed , we the citizens can control that if we wish ( either with government approval or despite government obstacles )

 

[sptrawler]

but reducing self-sufficiency is an Australian policy decision that can be reversed , we the citizens can control that if we wish ( either with government approval or despite government obstacles )

Yes there is a big ground swell, we are just yet to see it materialise, it is still a lot cheaper to value add overseas and companies will continue to offshore production if there is more money to be made that way e.g Redflow, Lynas, Breville, or they go the way of Hills Industries.
The Governments need to start and think the long game, rather than their next term in office, or we had better start teaching Mandarin in school.
Immigration rising, dollar falling, resources depleting, big income earners like Gas and coal on the nose and actively being sent out of business, this ain't heading anywhere nice IMO.

 

[divs4ever]

Food inflation hits the shopping trolley​

Food inflation hits the shopping trolley

UBS grocery price study shows food inflation moderating but remains elevated, consumers shifting to cheaper products. Woolworths seen as a BUY, Coles NEUTRAL.

www.marketindex.com.au

i hold both WOW and COL at no cash risk

( and had been busy stock-piling long-life food for the last 3 years when others were stacking gold and silver )

 

[sptrawler]

Food inflation hits the shopping trolley​

Food inflation hits the shopping trolley

UBS grocery price study shows food inflation moderating but remains elevated, consumers shifting to cheaper products. Woolworths seen as a BUY, Coles NEUTRAL.

www.marketindex.com.au

i hold both WOW and COL at no cash risk

( and had been busy stock-piling long-life food for the last 3 years when others were stacking gold and silver )

Yes good move.
I moved WOW on a few years ago and picked up AFI, over here in the West Aldi is eating WOW and Coles lunch.
Still hold Coles but waiting for a chance to exit, probably move the money into VAS.

 

[divs4ever]

Yes good move.
I moved WOW on a few years ago and picked up AFI, over here in the West Aldi is eating WOW and Coles lunch.
Still hold Coles but waiting for a chance to exit, probably move the money into VAS.

Aldi not doing so well here ( in rural QLD ) but the IGA and HOME Hardware ( both MTS franchisees ) are strong here not quite up the the COL and WOW outlets but look to be on freehold properties ( unlike the two big chains and the local Aldi )

BTW the HOME Hardware owner seems to be competitive against Bunnings grabbing a big chunk of the stock food and farm-related supplies

BTW i also hold BWP and WES ( both with cash at risk )

 

[sptrawler]

Aldi not doing so well here ( in rural QLD ) but the IGA and HOME Hardware ( both MTS franchisees ) are strong here not quite up the the COL and WOW outlets but look to be on freehold properties ( unlike the two big chains and the local Aldi )

BTW the HOME Hardware owner seems to be competitive against Bunnings grabbing a big chunk of the stock food and farm-related supplies

BTW i also hold BWP and WES ( both with cash at risk )

Over here in the West Bunnings has a virtual monopoly, the MIL shops at IGA and says they are getting to be cheaper than WOW, she is a frugal 90 year old so she would take notice.
WOW and COL still have reasonable foot traffic, but Aldi has been steadily increasing since opening to where they are very busy now. Also the oldest son has three teenagers who are huge eaters, the daughter in law says they save about $200/ shop at Aldi.
Fortunately the wife and I have cut down what we eat as we age, so food is the least of our outgoings.

 

[divs4ever]

Over here in the West Bunnings has a virtual monopoly, the MIL shops at IGA and says they are getting to be cheaper than WOW, she is a frugal 90 year old so she would take notice.
WOW and COL still have reasonable foot traffic, but Aldi has been steadily increasing since opening to where they are very busy now. Also the oldest son has three teenagers who are huge eaters, the daughter in law says they save about $200/ shop at Aldi.
Fortunately the wife and I have cut down what we eat as we age, so food is the least of our outgoings.

i thought Bunnings would have dominated here as well ( like they do in Brisbane ) a typically large modern complex but the rival is spread over three big locations and 'farmer's needs ( say pickets , fencing and similar stuff ) are notably cheaper and in plentiful supply , have gone to Bunnings twice now and only got a fraction of what i needed ( and i am a tightwad ) ( nothing close to a thousand dollar bill incurred , even when i got everything i wanted )

 

[mullokintyre]

German GDP at 0%.... It's been pretty anaemic since Jan 2021...

View attachment 160202

German house prices are worse than anaemic.

Mick

 

[mullokintyre]

OZ CPI up due to the usual suspects.

Mick

 

[divs4ever]

German house prices are worse than anaemic.
View attachment 163036
Mick

let's see the EU survive that hit to the nose

 

[over9k]

German house prices are worse than anaemic.
View attachment 163036
Mick

I've been saying europe's done for for a while.

 

[mullokintyre]

I've been saying europe's done for for a while.

If that is your performance metric, then the USA will be following germany.


And when you look at the housing market in the way we look at a stock price bid to ask , one can see the spread has become so large, that the market has almost frozen. The buyers and sellers are just meeting at any point on the spread. Given that morgage rates are above 7%, this is not surprising.




Housing starts are well down( nearly 16%) on previous years on a real basis as distinct from the totally useless and corrupt seasonally adjusted stats. And this despite a massive influx of population in the past two years.



I can only see this ending badly.
Mick