Where Does the Global Economy Go From Here?

[Spekulatius]

https://www.wsj.com/articles/scotts-miracle-gro-shortage-glut-inventory-fertilizer-11663261193?cx_testId=3&cx_testVariant=cx_2&cx_artPos=0&mod=WTRN#cxrecs_s

 

Interesting story about Scott's Miracle gro but there are some general things you can learn from this. The COVID-19 epidemic pretty much screwed up every manufacturing value chain I am aware of. How exactly depends but in all cases it's either a huge boom or bust in demand followed by the opposite.

 

I have seen this in the company I work for, where demand for certain components went from hero to zero in mid 2021 all of a sudden. Be it toilet paper ,energy, lumber ,semiconductors, cars or even gasoline and crude or lawn fertilizer in this case - we are seeing ripples that originate from the epidemic and that are still moving though the economic value chains to this day.

 

I think every boom will be followed by an equally severe bust and vice versa. Fun times.

 

 

[Gregmal]

Yup. Across the board it seems. What happens with easily producible commodity products….well you get as much of them as you want.
 

It seems to be getting clearer that no one really believes the inflation story, except maybe the Fed….look at price action in everything inflation protected/related…especially gold, instead it’s the R word.

[rohitc99]

26 minutes ago, Spekulatius said:

https://www.wsj.com/articles/scotts-miracle-gro-shortage-glut-inventory-fertilizer-11663261193?cx_testId=3&cx_testVariant=cx_2&cx_artPos=0&mod=WTRN#cxrecs_s

 

Interesting story about Scott's Miracle gro but there are some general things you can learn from this. The COVID-19 epidemic pretty much screwed up every manufacturing value chain I am aware of. How exactly depends but in all cases it's either a huge boom or bust in demand followed by the opposite.

 

I have seen this in the company I work for, where demand for certain components went from hero to zero in mid 2021 all of a sudden. Be it toilet paper ,energy, lumber ,semiconductors, cars or even gasoline and crude or lawn fertilizer in this case - we are seeing ripples that originate from the epidemic and that are still moving though the economic value chains to this day.

 

I think every boom will be followed by an equally severe bust and vice versa. Fun times.

 

 

Yes, seeing the same in our company too ..electronic/networking equipment. Inventory piling up though also due to chip shortage which continues for now

[Viking]

4 hours ago, Spekulatius said:

https://www.wsj.com/articles/scotts-miracle-gro-shortage-glut-inventory-fertilizer-11663261193?cx_testId=3&cx_testVariant=cx_2&cx_artPos=0&mod=WTRN#cxrecs_s

 

Interesting story about Scott's Miracle gro but there are some general things you can learn from this. The COVID-19 epidemic pretty much screwed up every manufacturing value chain I am aware of. How exactly depends but in all cases it's either a huge boom or bust in demand followed by the opposite.

 

I have seen this in the company I work for, where demand for certain components went from hero to zero in mid 2021 all of a sudden. Be it toilet paper ,energy, lumber ,semiconductors, cars or even gasoline and crude or lawn fertilizer in this case - we are seeing ripples that originate from the epidemic and that are still moving though the economic value chains to this day.

 

I think every boom will be followed by an equally severe bust and vice versa. Fun times.

@Spekulatius i think a number of things are happening at the same time. One thing by itself would be hard enough for companies/the economy to deal with. And they are all of different duration (some cyclical; some secular). Weave them all together and you have the reality of today. What is an investor to do? Be inquisitive. Open minded. And rational. 
1.) covid - still not close to being over

- largest economic impact today is general shift from goods to services

- zero covid policy in China 

2.) Into year 2 of high inflation in Western countries; currently at 8%

- Fed policy has shifted from extreme QE (caused bubbles in financial assets: stocks, bonds and real estate) to extreme QT (burst bond and stock bubbles and is deflating real estate bubble).

- inflation is starting to get entrenched into expectations.

3.) underinvestment for past 7 years/ESG/government policy has created a supply problem for energy. Result will be higher prices moving forward. Europe had an energy crisis well before Russia invaded Ukraine (yes, invasion made it worse…). This secular trend is inflationary. (Commodities are generally all in the same bucket here.)

4.) Russia invasion of Ukraine has created the greatest geopolitical crisis since the Second World War. Russia being one of worlds largest producers this is rippling through all commodity markets. And lots of other things.
5.) China has decided to come out. World is splintering into two blocks: West and authoritarian blocks.

6.) globalization is dead. Production is shifting from Asia back to North America and Europe. This secular trend is inflationary. 
7.) others?

Edited September 17, 2022 by Viking

[Viking]

4 hours ago, Gregmal said:

Yup. Across the board it seems. What happens with easily producible commodity products….well you get as much of them as you want.
 

It seems to be getting clearer that no one really believes the inflation story, except maybe the Fed….look at price action in everything inflation protected/related…especially gold, instead it’s the R word.

Ask any family if they think inflation is a problem. Food? Gas? Rent? I think +90% of families will say crazy high inflation is their top worry today. 
 

My guess is most businesses are building in inflation expectations of 4-5% when building budgets for 2023. (Those on the board with day jobs please correct me if i am wrong.)
 

I think gold is most highly correlated with the US$ not inflation. When the US$ stops rising my guess is then you will see gold pop higher. (I think gold has been rising nicely when priced in euros or yen.)

Edited September 17, 2022 by Viking

[Gregmal]

17 minutes ago, Viking said:

Ask any family if they think inflation is a problem. Food? Gas? Rent? I think +90% of families will say crazy high inflation is their top worry today. 
 

My guess is most businesses are building in inflation expectations of 4-5% when building budgets for 2023. (Those on the board with day jobs please correct me if i am wrong.)
 

I think gold is most highly correlated with the US$ not inflation. When the US$ stops rising my guess is then you will see gold pop higher. (I think gold has been rising nicely when priced in euros or yen.)

Gas prices have come down to pre Russia levels. Off 30% from June. Rents as mentioned a couple months ago are hitting the August comp and moderating. Most groceries too are in that category as the transport and production costs come down. The average family will still focus on what is in the news the same way they do with everything. COVID a good example. Forward looking with the market though, it’s hard seeing much evidence in anything but rates that there is much prep or positioning for higher inflation. Inventories everywhere are bloated.
 

That said I don’t really see a whole lot of truly actionable events other than big time positioning for a big economic downturn. Which IMO now really does come down to how much the more “demand destruction” needs to be seen. Gundlach had good commentary on a deflationary setup. FedEx was also very enlightening. 
 

At the moment I lean towards the current situation setting up a regular old run of the mill recession. One with a strong jobs market isn’t anything that is gonna be too painful, but at the same time, the academics and the economists and policymakers should play a decent role in shaping what the course of action is. The troubling trend of changing the definition of inflation and attacking any economic strength is certainly troubling, but at some point it should become clear that the trade offs aren’t worth it. I posted in another thread watching Inside Job again recently and it’s just so devious how interrelated the academics, hedge funds, and policy makers are. Larry Summers has been mentioned in some of these threads. Talk about a totally corrupted scumbag! So the situation is ever evolving but if the Fed wants moderating data they’re certainly going to see it. My take of the Fed is they’re well meaning but way too academic and often a few steps behind the ball. So in some respects, as Kuppy has mentioned, it’s about timing the pivot. I wouldn’t be shocked at 50 points next week, but 75 is fine too. What they do from there is probably the main thing of importance. They’ve already successfully created a lot of problems that didn’t exist a few months ago. 

[Spekulatius]

4 hours ago, rohitc99 said:

Yes, seeing the same in our company too ..electronic/networking equipment. Inventory piling up though also due to chip shortage which continues for now

You also have the strange thing going on that gluts and shortages for differnt items exists at the same time, which screws everything up.

 

Some of this has to supply chain managers yanking orders on and off like crazy. That‘s really bad for productivity (see the Fred’s productivity chart which has gone negative ).
One of my buddies working on the semiconductor equipment industry told me that they cancelled all their for supplier that are out more than 6 month because they are no concerned about demand, That’s after years of shortages and double ordering. now imaging these suppliers doing the same thing in Panik and you have another shock way running though and other value manufacturing  value chain. Those things are happening now all over the place.

 

As for @Gregmal assertion that inflation is on the retreat, i think partly it is as it pertains to volatile raw material and perhaps energy, gas etc, but it’s not true for core inflation. Core inflation is around 6% and I think it’s higher for producer prices. I know my company targets high single digits and that after years of 2% or less increases. The lousy productivity means that unit costs are higher and manufacturers try to pass those on. Those things have entrenched themselves and won’t go away easily.

 

I am in the process of shopping for a new car and if you want to have fun check what car manufacturers are doing as far as MSRP prices are concerned for their 2023 models. There might be something going on here that car manufacturer are miffed about dealers selling cars for thousands above MSRP and now trying to grab some extras margins raising the prices. The new Honda CRV is a case in point, even when you look past the point that the base model won’t even offered any more for the 2023 model, they raised the price for a like to like car by the high single digits for their 2023 model. Does anyone really believe that this is going to be reversed? I think that’s what entrenched inflation is looking like. and it’s just one example amongst many here.

 

Ironically the only countries immune from inflation seem to be China and Japan. China has seems heavy dose of inflation but they are back to 2% and change.

[Dinar]

55 minutes ago, Gregmal said:

Gas prices have come down to pre Russia levels. Off 30% from June. Rents as mentioned a couple months ago are hitting the August comp and moderating. Most groceries too are in that category as the transport and production costs come down. The average family will still focus on what is in the news the same way they do with everything. COVID a good example. Forward looking with the market though, it’s hard seeing much evidence in anything but rates that there is much prep or positioning for higher inflation. Inventories everywhere are bloated.
 

That said I don’t really see a whole lot of truly actionable events other than big time positioning for a big economic downturn. Which IMO now really does come down to how much the more “demand destruction” needs to be seen. Gundlach had good commentary on a deflationary setup. FedEx was also very enlightening. 
 

At the moment I lean towards the current situation setting up a regular old run of the mill recession. One with a strong jobs market isn’t anything that is gonna be too painful, but at the same time, the academics and the economists and policymakers should play a decent role in shaping what the course of action is. The troubling trend of changing the definition of inflation and attacking any economic strength is certainly troubling, but at some point it should become clear that the trade offs aren’t worth it. I posted in another thread watching Inside Job again recently and it’s just so devious how interrelated the academics, hedge funds, and policy makers are. Larry Summers has been mentioned in some of these threads. Talk about a totally corrupted scumbag! So the situation is ever evolving but if the Fed wants moderating data they’re certainly going to see it. My take of the Fed is they’re well meaning but way too academic and often a few steps behind the ball. So in some respects, as Kuppy has mentioned, it’s about timing the pivot. I wouldn’t be shocked at 50 points next week, but 75 is fine too. What they do from there is probably the main thing of importance. They’ve already successfully created a lot of problems that didn’t exist a few months ago. 

Greg, if you do not mind, can you elaborate on how you are protecting yourself against Fed engineered recession?  (If I understood you correctly, you think that it is the biggest risk, right?) Are you selling JOE?  Buying puts, if so on what index or sector?

 

Thank you.

[Gregmal]

10 minutes ago, Dinar said:

Greg, if you do not mind, can you elaborate on how you are protecting yourself against Fed engineered recession?  (If I understood you correctly, you think that it is the biggest risk, right?) Are you selling JOE?  Buying puts, if so on what index or sector?

 

Thank you.

I don’t really worry about fundamentally sound core positions with respect to upturns or downturns. Cycles are part of investing. You’ll never make real money worrying about mark to market fluctuation. I can give you like a dozen examples here just in the past 12 months.
 

JOE for instance I stayed disciplined on with regard to purchase. The volatility makes sense with respect to the overall nature of the company and its trading. It’s volatile and surface wise a great target for speculators who still live in 2007 and ignore anything but certain academically taught notions of PE multiples and cycle monitoring. Nice Rolex, is it for sale? No? Must be worthless then!
I’m still in the accumulation phase and happy to go way bigger at lower prices. Much of my thoughts are detailed throughout the thread going back several years now. Folks right now are mistaking widespread stock market price action with fundamental victories just look at how some Homebuilders or stuff like HHC have done…garbage; a classic and common mistake of novice investors. See AIV. As recently as this week I’ve been on the ground getting info and macro wise the Fed isn’t solving the housing issue by making it more unaffordable; they’re making it worse. 

MSG stuff too. I don’t own much that isn’t in the unbreakable camp. 
 

For broader market, I’ve just been rotating October and November IWM puts. You want to be vigilant and when the system is manipulated the way it is, take those dollars when you can get them. Right now everyone is looking backwards for inflation because it’s en vogue. Everything seems to be deflating and sorry but a strong jobs market isn’t bad. At some point we turn and then it’s off to the races. 

 

[Viking]

1 hour ago, Spekulatius said:

You also have the strange thing going on that gluts and shortages for differnt items exists at the same time, which screws everything up.

 

Some of this has to supply chain managers yanking orders on and off like crazy. That‘s really bad for productivity (see the Fred’s productivity chart which has gone negative ).
One of my buddies working on the semiconductor equipment industry told me that they cancelled all their for supplier that are out more than 6 month because they are no concerned about demand, That’s after years of shortages and double ordering. now imaging these suppliers doing the same thing in Panik and you have another shock way running though and other value manufacturing  value chain. Those things are happening now all over the place.

 

As for @Gregmal assertion that inflation is on the retreat, i think partly it is as it pertains to volatile raw material and perhaps energy, gas etc, but it’s not true for core inflation. Core inflation is around 6% and I think it’s higher for producer prices. I know my company targets high single digits and that after years of 2% or less increases. The lousy productivity means that unit costs are higher and manufacturers try to pass those on. Those things have entrenched themselves and won’t go away easily.

 

I am in the process of shopping for a new car and if you want to have fun check what car manufacturers are doing as far as MSRP prices are concerned for their 2023 models. There might be something going on here that car manufacturer are miffed about dealers selling cars for thousands above MSRP and now trying to grab some extras margins raising the prices. The new Honda CRV is a case in point, even when you look past the point that the base model won’t even offered any more for the 2023 model, they raised the price for a like to like car by the high single digits for their 2023 model. Does anyone really believe that this is going to be reversed? I think that’s what entrenched inflation is looking like. and it’s just one example amongst many here.

 

Ironically the only countries immune from inflation seem to be China and Japan. China has seems heavy dose of inflation but they are back to 2% and change.

The problem with inflation is it will give you lots of head fakes along the way… looks like it is turning down and then… BOOM ! (as my favourite football announcer John Madden used to say) it turns higher again. What do people think will be happening to commodity prices in another 12-18 months when the global economy is back in growth mode? And China is stimulating their economy? Oil? +$100 (perhaps much higher). Steel? +$1,000. Lumber? +$1,000. And if we actually get around to electric vehicles…. Copper? Other metals? Much higher. Inflation will rip again. And if the shortage of workers in the US is structural… more inflation. Ukraine war and then rebuild of their economy? Gonna need lots of materials…
 

Please note, i am not doom and gloom. I think North America is going to outperform the rest of the world the next couple of years. And i really have no idea where inflation goes… but if it stays high (5%) i will not be surprised. And if you have a debt bubble isn’t the way to fix it to let inflation rip for 4 or 5 years (kind of what we have been doing the last 18 months) to bring debt levels down in real terms? That was the playbook governments and central banks used after WWII and it worked… looks to me like the same thing is happening in US and Europe today (especially Europe). 

[rohitc99]

2 hours ago, Spekulatius said:

You also have the strange thing going on that gluts and shortages for differnt items exists at the same time, which screws everything up.

 

Some of this has to supply chain managers yanking orders on and off like crazy. That‘s really bad for productivity (see the Fred’s productivity chart which has gone negative ).
One of my buddies working on the semiconductor equipment industry told me that they cancelled all their for supplier that are out more than 6 month because they are no concerned about demand, That’s after years of shortages and double ordering. now imaging these suppliers doing the same thing in Panik and you have another shock way running though and other value manufacturing  value chain. Those things are happening now all over the place.

 

As for @Gregmal assertion that inflation is on the retreat, i think partly it is as it pertains to volatile raw material and perhaps energy, gas etc, but it’s not true for core inflation. Core inflation is around 6% and I think it’s higher for producer prices. I know my company targets high single digits and that after years of 2% or less increases. The lousy productivity means that unit costs are higher and manufacturers try to pass those on. Those things have entrenched themselves and won’t go away easily.

 

I am in the process of shopping for a new car and if you want to have fun check what car manufacturers are doing as far as MSRP prices are concerned for their 2023 models. There might be something going on here that car manufacturer are miffed about dealers selling cars for thousands above MSRP and now trying to grab some extras margins raising the prices. The new Honda CRV is a case in point, even when you look past the point that the base model won’t even offered any more for the 2023 model, they raised the price for a like to like car by the high single digits for their 2023 model. Does anyone really believe that this is going to be reversed? I think that’s what entrenched inflation is looking like. and it’s just one example amongst many here.

 

Ironically the only countries immune from inflation seem to be China and Japan. China has seems heavy dose of inflation but they are back to 2% and change.

I work in supply chain and its quite chaotic. In the past demand was a constraint, so the focus was always to order as needed and not constrain supply. when demand spike, these orders went through, but some critical components could not be sourced such as chip. now you have a glut and excess of everything except those few critical components

 

now supply is being and everyone is working hard to bring down the excess. as soon as the critical components are available, we could see the shortages dissapear. a lot of demand may also be articifically inflated. people over order when there is shortage. we could see the reverse happen as supply returns to normal

[changegonnacome]

8 hours ago, Gregmal said:

sorry but a strong jobs market isn’t bad.

 

I'm not sure when you're going to accept that US domestically produced & sourced core inflation is trucking along at 6%.......and the ONLY way this is brought back to 2% is by ultimately hitting the jobs market......and how you get there is in steps........first by hitting the money supply (done ), then that feeds into credit demand markets (partially done , but more to go, inflation adjusted negative credit rates still available to borrowers) which ultimately feeds into depressing aggregate spending/income (not done) and by extension the jobs market (not done).

 

The fact the labor market hasnt really been hit yet is not good news and shows how we are no where near the end of this rate hiking cycle.......unfortunately we are still at the beginning....which is a function of what I've been saying for a few months now......the Fed, even now, remains accommodative when you inflation adjust to get real interest rates. There is STILL a major labor shortage. Aggregate demand CONTINUES to exceed aggregate supply in the United States.

 

This is not even close to being over yet.

Edited September 17, 2022 by changegonnacome

[CorpRaider]

CAPE below 29!  Not at 8 (yet), but making some moves.

Edited September 17, 2022 by CorpRaider

[Gregmal]

Well I also think we ve mentioned before that when you are basing your idea of TODAYS inflation on what happened months or a year ago, you’re constantly going to be behind the 8 ball and out of touch with reality. Sternlicht had a decent take earlier this week on that.  Ask Scots Miracle if the wage price spiral is moving fertilizer. Too much bs academic input here. 

[changegonnacome]

34 minutes ago, Gregmal said:

TODAYS inflation on what happened months or a year ago, you’re constantly going to be behind the 8 ball and out of touch with reality.

 

I understand base effects…and this aint it…..as I told you before - i look at contemporaneous non-farm payrolls, that are M-o-M…then annualize….this ain’t a year ago inflation….its happening right now….then I gave you the mental model on how to interpret that BLS contemporaneous data…workers in low single digit net margin businesses are securing pay rises because of the labor shortage…….then the goods and services they sell have to go up in price (they have to go up or the biz they work in goes out of biz)….your time lag theory on the data ….is leading you astray I think……your also focused on the price of things that get put on shipping containers and sent to America…..your looking for inflation in the wrong place and your missing the wood for the tress.

Edited September 17, 2022 by changegonnacome

[Gregmal]

The notion that higher wages = inflation is academic and unsubstantiated. It’s also a fallacy that companies need to raise prices or go out of business. Homebuilders for instance represent the holes in this argument well. If all the commodity inputs revert back to normal pricing ranges, the margins expand on existing contracted sales. Going forward, new ones are negotiated based on prevailing rates and inventories. If there’s real, widespread inflation like there was all of last year, that’s problematic without saying. But scenarios where all the inputs go down and labor goes up, is hardly a big deal.
 

Bigger than all of this, is the ramifications that may occur if for instance folks that don’t understand how much of this is just related to supply chains and will resolve on its own over the next few months, and subscribe to the idea that job strength alone = inflation, take actions that permanently impair demand. It’s like the whole idea that someone should lose 100% of their purchasing power due to layoffs rather than 1-2% because of inflation. It’s all twilight zone shit.

[Gregmal]

This is a replay of COVID where everyone sits around hanging in the balance for every little data release and then makes bombastic extrapolations in perpetuity based off it. This weeks CPI just being the latest example. The overall trend will be lower, much lower, but if you expect it to happen overnight, there’s just nothing that’s gonna make that happen because of the way all this stuff ebs and flows.

[Spekulatius]

2 hours ago, Gregmal said:

Well I also think we ve mentioned before that when you are basing your idea of TODAYS inflation on what happened months or a year ago, you’re constantly going to be behind the 8 ball and out of touch with reality. Sternlicht had a decent take earlier this week on that.  Ask Scots Miracle if the wage price spiral is moving fertilizer. Too much bs academic input here. 

Sternlicht talks his own book. Look at what his business does. Higher Interest rates are poison for him. It always makes sense to understand the interest of a speaker.

[ERICOPOLY]

16 minutes ago, Gregmal said:

The notion that higher wages = inflation is academic and unsubstantiated. 

 

Isn't it driven by the line of thought that you can charge what the market can bear?

[gfp]

Just one data point, but I filled my tank up yesterday at $2.89 / gallon in New Orleans East.  Ghetto as hell but hadn't seen that price in a while.

[Gregmal]

5 minutes ago, Spekulatius said:

Sternlicht talks his own book. Look at what his business does. Higher Interest rates are poison for him. It always makes sense to understand the interest of a speaker.

Of course, everyone does. But some of them actually have it right. Relying on old data and determining that jobs are bad and the answer is to destroy everything just isn’t very logical. If 4% FF rate is the end game that’s no biggie. If they buy into much of this academic nonsense and decide to go higher it’s obviously going to be problematic.
 

You saw the same sort of nonsense which actually exacerbated the GFC in the sense that the academics, who were paid by the hedge funds and banks, pushed theories to the Fed and legislators, aka derivative deregulation stabilized the economy, things that were preposterous, while simultaneously taking positions betting against that…only to flip the narrative once convenient and in a position to profit off screaming fire…same exact shit happening now.
 

No one is playing the inflation trade anymore, it’s all economic collapse. And they’re betting on it by hoping the chumps at the Fed follow the academics. I mean people were screaming this week for an emergency Fed meeting and a 100-200 point hike bc of ONE cpi release LOL. End or the day I don’t think the Fed is that stupid. The fact that they have to continue to take action while seeing the potential damage they may do inclines me to believe there would be a point where they see how dumb and counterproductive it all is. 

[Gregmal]

Billy Ackman is always a good barometer. In Spring he was saying the market was tanking because the Fed was refusing to raise rates. Now he’s saying the market needs them to stop to go up! Obviously his agenda is shifting. So are his core inflation predictions which not surprisingly have now come way down. 

[Gregmal]

2 hours ago, ERICOPOLY said:

 

Isn't it driven by the line of thought that you can charge what the market can bear?

Inflation should not really exist for extended periods of time in developed first world countries where there is a capitalist economy. Everyone keeps blindly quoting the 70s bc it’s the only thing they know where inflation existed but there is virtually nothing in common with the two periods. Japan is proof of this as is the decade prior to COVID here, something that always seems to stump and bewilder the inflation crowd. Governments created the current problem with their COVID response and only time will fix it. 
 

Claiming there is a problem when people get raises or have better job opportunities available is basically advocating for communism. You are what you are and don’t deserve to ever get beyond that place. If too many people do, we need to stop it! WTF? It’s an elitist ruling class perspective. 

Edited September 17, 2022 by Gregmal

[changegonnacome]

8 hours ago, Gregmal said:

The notion that higher wages = inflation is academic and unsubstantiated.

 

LoL. OK riddle me this......whats your solution to the business owner in a low single digit net margin business.....who cant get or retain staff without raising wages.......said business owner has also, because they are in a low single digit margin business, optimized everything he/she can....the fat was trimmed years ago. They also love owning the business so aren't changing or closing it down but they also wont own/manage it for FREE.

 

So @Gregmal whats your solution that doesn't involve raising the price of the underlying good and service being sold? Let's assume you dont have one.....well because there isn't one that doesnt involve raising prices. 

 

You should also realize it just so happens that poorest American's work predominately in these types of businesses AND most importantly again lest 'the little guy' getting a pay raise argument comes back......the majority (80%+) of these folks household budgets are dedicated to buying goods/services (food/ necessities etc.) from these very types of businesses. Higher wages absolutely equal inflation here and you dont need a PHD from Harvard to figure it out.....you also don't need a PHD to realize that 'the little guy' isnt winning in this game.....at best their purchasing stand stills.....at worst it falls behind. 

 

If you cant see the problem here at the micro level and how it scales to the macro..........I can assure you the Fed does.......and are going to act accordingly.

Edited September 17, 2022 by changegonnacome

[Gregmal]

30 minutes ago, changegonnacome said:

LoL. OK riddle me this......whats your solution to the business owner in a low single digit net margin business.....who cant get or retain staff without raising wages.......said business owner has also, because they are in a low single digit margin business, optimized everything he/she can....the fat was trimmed years ago. They also love owning the business so aren't changing or closing it down but they also wont own/manage it for FREE.

If one modest and run of the mill business input makes the entire thing unviable, that sounds like a bad business to begin with. Does it matter if it is wages, or freight costs or taxes that went up to erode that margin? What does a bad or unenviable business have to do with inflation? 
 

I mean stepping back it’s highly simple and logical. You lock people in their homes and…there’s gonna be a huge short term boost for goods. Let them out….huge short term boost in demand for services. The former fell off a cliff already like 3-6 months ago when even NY/CA said go be free, and now we re hung up on the later, but it’s because of…..the whole 2014 money printing inflation thesis?

Edited September 17, 2022 by Gregmal