Where Does the Global Economy Go From Here?

[Gregmal]

6 minutes ago, Gamecock-YT said:

 

Yeah, when the consensus is 'mild recession', you can count on it being something else. Plus have you ever heard someone in the public domain prognosticate we're going to have a bad recession? 

Basically everyone and their mother who was asked for a comment or soundbite in H2 of last year was calling for a hard landing. Now we have a few weeks of very predictable data coming through, and half them have changed their minds again. Even Jamie Dimon, who is one of my favorites, goes from hurricane to mild in what? 4 weeks? Thats why its best to just ignore the noise. 

[Jaygo]

All i know is America is very expensive vs Canada. All prices (except fuel) are basically the exact same except our currency is 35% lower in value. 

 

You guys should be sale shopping in Canada. Both for products and investments.

 

I would say that to come back in line you could see prices drop 20-40 % ( a recession / depression on paper ) just to get back in line with your friends to the north.

 

Considering everything ive seen I am confident to say your inflation has gone from money supply increasing to companies taking their pound of flesh, why is Mcdonalds charging 8 USD for a breakfast meal when the Canadian version is charging 7 and change CAD. Mcdonalds canada has better coffee too.

 

I see some pain ahead for the US markets and I will be allocating more investment dollars to Canadian companies. Better Value on paper and far more stability in earnings potential.

 

If only we could find some unloved companies with Canadian expenses getting paid in USD  

 

I also see a path for further depreciation of the Canadian $ vs USD since your interest rates should stay higher longer than ours.

 

 

 

 

[Spooky]

On 1/20/2023 at 11:17 AM, Spekulatius said:

LOL. I also look forward from the discussion moving  from inflation to deflation. Mr Market is always on the move.

 

Called it last year!

[Gregmal]

14 minutes ago, Jaygo said:

Considering everything ive seen I am confident to say your inflation has gone from money supply increasing to companies taking their pound of flesh, why is Mcdonalds charging 8 USD for a breakfast meal when the Canadian version is charging 7 and change CAD. Mcdonalds canada has better coffee too.

I marvel at this even within the States. In NJ its $10 for a Big Mac meal and yea like $8 for breakfast. The dollar menu is now the $3 each menu. In Georgia or Tennessee? You can still get 2 1/4 pounders with fries and a drink for $5. 

[Dinar]

6 minutes ago, Gregmal said:

I marvel at this even within the States. In NJ its $10 for a Big Mac meal and yea like $8 for breakfast. The dollar menu is now the $3 each menu. In Georgia or Tennessee? You can still get 2 1/4 pounders with fries and a drink for $5. 

There is a simple explanation.  In NJ, there is no incentive to work due to very generous welfare programs, and so labor costs and arm and a leg.  In the South, you do not have generous welfare programs, so people actually work, labor supply is higher and hence cost of labor is lower.  Real estate costs of course play a role as well, but they are dominated by labor costs.  

[Ross812]

57 minutes ago, Dinar said:

There is a simple explanation.  In NJ, there is no incentive to work due to very generous welfare programs, and so labor costs and arm and a leg.  In the South, you do not have generous welfare programs, so people actually work, labor supply is higher and hence cost of labor is lower.  Real estate costs of course play a role as well, but they are dominated by labor costs.  

 In Georgia the average crew member at MCD makes $12.09 in New Jersey its $13.29. I'd say it not government programs. In NJ median income is 39k versus 30k in GA; it might just be typical economics. MCD charges what the market will bear. 

[Dinar]

15 minutes ago, Ross812 said:

 In Georgia the average crew member at MCD makes $12.09 in New Jersey its $13.29. I'd say it not government programs. In NJ median income is 39k versus 30k in GA; it might just be typical economics. MCD charges what the market will bear. 

Would you mind sharing the source of the data?  The reason that I am surprised is that I was told by an ice cream shop operator in Bergen county (NJ) that he has to pay $20 per hour to attract teen-age staff to work.

[Gregmal]

Well thats cuz privileged Bergen County white kids generally arent interesting in working for minimum wage. In that area specifically, the Hispanics have taken a lot of the lower end labor jobs, the QSR type stuff. Half my siblings worked at Van Dyk's (on the Ridgewood border) in high school. Ice cream shops are a totally different game. That $20 you talk of also needs to be off the books and come with free ice cream lol. 

Edited January 27, 2023 by Gregmal

[Jaygo]

11 hours ago, Gregmal said:

11 hours ago, Jaygo said:

Considering everything ive seen I am confident to say your inflation has gone from money supply increasing to companies taking their pound of flesh, why is Mcdonalds charging 8 USD for a breakfast meal when the Canadian version is charging 7 and change CAD. Mcdonalds canada has better coffee too.

Expand  

I marvel at this even within the States. In NJ its $10 for a Big Mac meal and yea like $8 for breakfast. The dollar menu is now the $3 each menu. In Georgia or Tennessee? You can still get 2 1/4 pounders with fries and a drink for $5. 

Sorry Gregmal but this looks like it’s pretty widespread

 

Same meal as in lower PA from the above post and today outside of Charlotte. Same price. 
 

also now I’m in DC. A lululemon shirt I bought two weeks ago for 90 CAD in Toronto was 88 usd in tyson corners mall

 

companies are raking you guys over the coals as far as I can tell. 

[Blugolds]

14 hours ago, Ross812 said:

 In Georgia the average crew member at MCD makes $12.09 in New Jersey its $13.29. I'd say it not government programs. In NJ median income is 39k versus 30k in GA; it might just be typical economics. MCD charges what the market will bear. 

 

^^ This

 Same with LULU, everything is priced to the upper level of what the market will bear. All companies want to increase prices to find that line where it negatively impacts sales...then back off just a touch. isnt this basic theory?

 

I live in the largest metro area between this state and my neighboring home state. McDonlads prices here are actually not much different than my home area. That is to say, $8 for breakfast meal, around $13 for a burger value meal. That actually surprised me. I have a cabin in a small recreational community about 2.5hrs from the metro. Summer sees some tourism but the rest of the year its dead. Also, the county is the poorest in the state, by a wide margin, I saw the statistics and its like 40+% below the poverty line and on assistance, pretty much zero college degrees, avg age mid 40's. Wages at that Mcdonalds are low, primarily 16yr old kids at the counter with one middle aged manager. Its not labor costs, they are charging what the market will support (or what they can get away with, however you want to look at it). Ironically I have also noticed that when at the cabin, there is a WMT about 15-20 min away, only offering like that for an least an hour in every direction...the prices at that WMT are HIGHER for many things than at home in the major metropolitan area! These are for staples that we regularly buy at home, and dont want to pack the car when we go, so we end up shopping there for the stuff at the cabin. Noticeably higher prices and I cant help but feel for those folks that live there year round in a 1970's trailer with bags of leaves around the skirting for insulation, 10 immobile cars in the front yard, the entire county besides the stuff right around the lake is straight out of a Jeff Foxworthy routine. 

 

 

15 hours ago, Dinar said:

There is a simple explanation.  In NJ, there is no incentive to work due to very generous welfare programs, and so labor costs and arm and a leg.  In the South, you do not have generous welfare programs, so people actually work, labor supply is higher and hence cost of labor is lower.  Real estate costs of course play a role as well, but they are dominated by labor costs.  

 

I was actually just talking to a guy I know who has moved back to our area with our company, he was previously down south working at a BMW plant setting some things up for them. It was a nightmare with labor. Nobody wanted to work, even the employees he dealt with. Income is low, education is poor and they are getting paid around $30k/yr full time. If you look at the stats on several southern states it is similar to the county I described above. There are entire counties down south with the majority of the pop on welfare. Work ethic and employee/employer understanding is completely different north/south. Nobody wants to work down there. Those that do are majority migrants, legal or illegal. My coworker said it was a serious problem filling positions, and when filled they literally showed up half of the week. Firing them didnt matter because you would just be back at square one, and the new hire would just pull the same stuff once on board. I could not believe the stories he was telling me. 

 

 

Regardless, we see it everywhere. I had a new shop built last fall. Menards used to have a $175 delivery charge and raised it to $250 due to fuel costs when diesel was at its peak...fuel surcharge has remained in place while fuel costs have returned in line, more normal. Compare $3.50 diesel to $5.50 diesel, avg delivery route and the fact that the semi truck that delivered my materials made 3 other stops all paying the increased fuel surcharge. There is fat there. Nobody said that businesses had to be fair in what they charge and a capitalist would argue that it is the duty of the business to charge the absolute most they can.  I suspect they will never drop, but what do you do? People need materials delivered..you cant transport trusses, pallets of sheeting, sheets of steel roofing/siding in your pickup or trailer so the consumer is faced with eating the hike or not doing the project. Granted, as a percentage of overall project cost it is nothing, but combine that with the fact that literally everything at Menards is now 3x the price it was a year or two ago and it adds up. 

[Dinar]

solution seems to be to gut welfare, then people have to work

[UK]

https://www.wsj.com/articles/global-economy-economic-losers-fba30b53

 

The world’s biggest economies are offering  huge subsidies in a cutthroat race to win the industries of the future. The losers: all the countries that can’t pay up.  New tax credits for manufacturing batteries, solar-power equipment and other green technology are drawing a flood of capital to the U.S. The European Union is trying to respond with its own green-energy support package. Japan has announced plans for $150 billion of borrowing to finance a wave of investment in green technology. All of them are working to become less dependent on China, which has a big lead in areas including batteries and the minerals to make them.