Is The Bottom Almost Here?

[mattee2264]

22 hours ago, UK said:

 

What would be your view in terms of probabilities, that market will test previous lows or reach substantial new lows, say 3000 or below, in the next 6-12 month?

 

Well currently at just below 4000 markets are placing a 20x multiple on current earnings. That is a pretty generous multiple when the Fed is telling us rates will hit 5% in 2023 and there seems to be a lot more downside for earnings as the full impact of rate hikes hasn't been felt, inflation is still more of a tailwind than a headwind to nominal earnings and the consumer has been able to stretch to continue spending and the jobs market is still holding up well.

 

With a soft landing type scenario I think markets will trade in the 3400-3800 range with modestly declining earnings weighing on the indices but somewhat offset by speculation that the pause/pivot is coming closer and cheer about falling inflation figures. But I do not expect a V shaped recovery. The economic strength of 2021 was a mirage and even with a pivot credit wouldn't be easy enough to make financial engineering as easy as it used to be. On the other hand inflation is quite helpful in easing the burden (if the market goes sideways in nominal terms but inflation stays in the mid single digits then over a few years valuations become more reasonable). 

 

I think the possibilities of this (for the USA at least) are quite high perhaps as much as 50%. So far it does look more like a slowdown as the unprecedented stimulus wears off and consumers and businesses cut back in response to higher costs. That should produce a mild if not brief recession. 

 

In a hard landing offset by a pivot/pause/decline in the terminal rate you probably get a slightly lower bottom (maybe 3200) but a faster recovery because it will once again confirm the Fed put which makes it impossible for sentiment to get bearish enough to make proper bear market lows. As in a hard landing scenario inflation probably comes down quite rapidly in 2023 I can see the Fed pivoting pretty damn quickly. I would put this at a 40% probability. 

 

I think to go 3000 or below you would need a hard landing AND a Fed which refuses to budge OR some kind of financial crisis. All seems fairly unlikely. Maybe 10% probability. 

 

 

[dealraker]

16 minutes ago, dealraker said:

Cod Liver - so the club that began in 1954 of course has no founding or original members and the older guys that I often refer to here are all gone.  We have a large candy maker company member, large NC grading company member, a architect whose family builds dry kilns all over the country, and the list goes on.  These guys are younger than me (68 for me) as is now half the club and they are of another world as to investments.  The older guys?  My brother-in-law 75; his brother 80; and so many others not only can't hear but are like "one sentence" is enough as to actual investments.  So it isn't necessarily a bad thing but this lawyer guy who is 76 sort-of took over the club in the last few years (took over because the members come for social reasons far more than investment) and he has us rotating in and out of low PE value stocks.  I mean here the Bristol Myers type things (we bought recently in the $60's...but you get the message).  Dividends rule and whatnot.  The game is lame as to stimulation, the meetings very short and not informative.  The old days are gone and I'm attending about half.  

 

The good thing is that our family owns (I'm a one of 11 member) two side by side 1000 acre tracts of land about 14 miles out of town with mid-size cabins and ponds and we picnic there a couple times a year.  We rent a van to pick up members (think age) and even those gatherings end for most (some of us hang around for hours) quickly so the older guys can get home in the daylight.  

 

Getting older?  So you wonder why I'm here and I post?  Staying involved, doing things, bashing around in all ways of life keeps you pulsatingly alive.  And I want to be a part of things for as long as I can.

 

Have a great day.  A list of what I think, and others will differ, good businesses is coming.  Life is great...if you can stand it.  

 

By the way, we had a mining company come offer us "we'll give you one million each (total $11 mil) to let us have 3 acres to dig and mine your land (the big tracts)".  They wouldn't even tell us 'what' they were going to mine but we think this and that...and told them "No."  Haven't heard from them since the markets broke.  FY entertainment one of the themes of this land is that members find ever more productions of "Big Foot" and these are placed both on the porches of the cabins or on the hiking trails - we have miles of trails which has become our throughout the year projects to build and upkeep.  Silly but fun boy stuff is as deep as it gets.

 

Spooky Parsad has bought some of the big tech, you may get him to clarifly what, he may have already done that a while back.  I have $ in Google and Meta but I'm done with those as to adding.  And things like Microsoft don't interest me whatsoever.  I'm anti-cloud focused all the way at this point, to me the theme has the entire world chasing it endlessly.  The asset managers are obsessed upon too.  I like homebuilding and banks, but these aren't continual performers of course...they aren't the sustainable types.  But Joe may be.  Joe is exceptionally stimulating to me these days.  I'm trying to read some each day about Joe and let it add up.  I began following Bruce Berkowitz by early 1991 when he worked for Smith Barney and was chanting up the value stuff big time.  I was an original investor in his mutual fund (the only fund I ever bought) and got a 3x outcome.  But his foray into stuff, particularly his hiring of his bro-in-law and the ponytail...then his multi-swapping of stocks...AIG and such,  lost me and I got out.  But we all stray and I think Bruce with Joe may be on to the game again.

 

Rambling.  I'll add to all the exchanges and rails should time and price come around.  Then those insurance brokers are always out there and continually messing with my limits of belief- to prove me dead wrong yet again!

[UK]

1 hour ago, mattee2264 said:

 

Well currently at just below 4000 markets are placing a 20x multiple on current earnings. That is a pretty generous multiple when the Fed is telling us rates will hit 5% in 2023 and there seems to be a lot more downside for earnings as the full impact of rate hikes hasn't been felt, inflation is still more of a tailwind than a headwind to nominal earnings and the consumer has been able to stretch to continue spending and the jobs market is still holding up well.

 

With a soft landing type scenario I think markets will trade in the 3400-3800 range with modestly declining earnings weighing on the indices but somewhat offset by speculation that the pause/pivot is coming closer and cheer about falling inflation figures. But I do not expect a V shaped recovery. The economic strength of 2021 was a mirage and even with a pivot credit wouldn't be easy enough to make financial engineering as easy as it used to be. On the other hand inflation is quite helpful in easing the burden (if the market goes sideways in nominal terms but inflation stays in the mid single digits then over a few years valuations become more reasonable). 

 

I think the possibilities of this (for the USA at least) are quite high perhaps as much as 50%. So far it does look more like a slowdown as the unprecedented stimulus wears off and consumers and businesses cut back in response to higher costs. That should produce a mild if not brief recession. 

 

In a hard landing offset by a pivot/pause/decline in the terminal rate you probably get a slightly lower bottom (maybe 3200) but a faster recovery because it will once again confirm the Fed put which makes it impossible for sentiment to get bearish enough to make proper bear market lows. As in a hard landing scenario inflation probably comes down quite rapidly in 2023 I can see the Fed pivoting pretty damn quickly. I would put this at a 40% probability. 

 

I think to go 3000 or below you would need a hard landing AND a Fed which refuses to budge OR some kind of financial crisis. All seems fairly unlikely. Maybe 10% probability. 

 

 

 

Thanks for you answer!

[UK]

1 hour ago, dealraker said:

Spooky Parsad has bought some of the big tech, you may get him to clarifly what, he may have already done that a while back.  I have $ in Google and Meta but I'm done with those as to adding.  And things like Microsoft don't interest me whatsoever.  I'm anti-cloud focused all the way at this point, to me the theme has the entire world chasing it endlessly.  The asset managers are obsessed upon too.  I like homebuilding and banks, but these aren't continual performers of course...they aren't the sustainable types.  But Joe may be.  Joe is exceptionally stimulating to me these days.  I'm trying to read some each day about Joe and let it add up.  I began following Bruce Berkowitz by early 1991 when he worked for Smith Barney and was chanting up the value stuff big time.  I was an original investor in his mutual fund (the only fund I ever bought) and got a 3x outcome.  But his foray into stuff, particularly his hiring of his bro-in-law and the ponytail...then his multi-swapping of stocks...AIG and such,  lost me and I got out.  But we all stray and I think Bruce with Joe may be on to the game again.

 

Rambling.  I'll add to all the exchanges and rails should time and price come around.  Then those insurance brokers are always out there and continually messing with my limits of belief- to prove me dead wrong yet again!

 

Very interesting, thanks!

[Spekulatius]

@dealraker the exchanges have been terrific business in the 90's and early 2000's but they are becoming more competitive. For one, there are more exchanges and new one a popping up now and then, so barrier to entry is lower now and the whole space has become more competitive. The commissions are on a race to the bottom (or at zero already) so the fees have to be racked in ancillary business (collocation, data feed revenues, analytics) I guess the latter is where MSFT comes in with LSE.

 

I don't think they are as good of a business than they used to be any more.

[dealraker]

Thanks Spek.  

[TwoCitiesCapital]

On 11/30/2022 at 2:35 PM, Parsad said:

 

Yeah, I called it then when I started this thread and I would say the rebound runs through into January or so.  So we can close this thread.  

 

The naysayers are going to say it's a fool's rebound and the yeasayers are going to say we're going to the moon!

 

Any change in position here?

 

11/30 was the local top and were down ~6% on the S&P since. 

 

A handful of us were pretty consistent in saying it was a bear-market bounce from oversold conditions, but there were a number of people suggesting and intermediate bottom was in. 

 

Curious to hear how those people view the last two weeks of market activity and cratering PMIs that have occured since. 

 

[TwoCitiesCapital]

3 hours ago, mattee2264 said:

 

Well currently at just below 4000 markets are placing a 20x multiple on current earnings. That is a pretty generous multiple when the Fed is telling us rates will hit 5% in 2023 and there seems to be a lot more downside for earnings as the full impact of rate hikes hasn't been felt, inflation is still more of a tailwind than a headwind to nominal earnings and the consumer has been able to stretch to continue spending and the jobs market is still holding up well.

 

With a soft landing type scenario I think markets will trade in the 3400-3800 range with modestly declining earnings weighing on the indices but somewhat offset by speculation that the pause/pivot is coming closer and cheer about falling inflation figures. But I do not expect a V shaped recovery. The economic strength of 2021 was a mirage and even with a pivot credit wouldn't be easy enough to make financial engineering as easy as it used to be. On the other hand inflation is quite helpful in easing the burden (if the market goes sideways in nominal terms but inflation stays in the mid single digits then over a few years valuations become more reasonable). 

 

I think the possibilities of this (for the USA at least) are quite high perhaps as much as 50%. So far it does look more like a slowdown as the unprecedented stimulus wears off and consumers and businesses cut back in response to higher costs. That should produce a mild if not brief recession. 

 

In a hard landing offset by a pivot/pause/decline in the terminal rate you probably get a slightly lower bottom (maybe 3200) but a faster recovery because it will once again confirm the Fed put which makes it impossible for sentiment to get bearish enough to make proper bear market lows. As in a hard landing scenario inflation probably comes down quite rapidly in 2023 I can see the Fed pivoting pretty damn quickly. I would put this at a 40% probability. 

 

I think to go 3000 or below you would need a hard landing AND a Fed which refuses to budge OR some kind of financial crisis. All seems fairly unlikely. Maybe 10% probability. 

 

 

 

I don't know if it'll be the bottom, but I expect quite a bit of support at 3200. That's really my base case for when I will sustainably start adding, and holding, equity exposure again instead of trading dips and rallies. 

 

If the decline in earnings is more than just a modest contraction, or inflation proves stickier because of some new supply chain crisis or oil shock, than I don't think 3200 holds and would be looking more towards ~2,800 as the level.

 

We'll see how this unfolds

[Gregmal]

A lot of “the bottom” I suppose depends on what people define as “the market”. There seems to be this wild obsession with S&P levels but that’s not really the most intelligent market marker IMO, for a number of reasons but largely the large cap tech concentration. There’s still plenty of evidence that many smaller tech names bottomed in June. Let’s call em SoftBank/Tiger companies. Some haven’t but a lot hit and moved well off those levels. Since we have seen lots of other, recent example the homebuilders. Even Goldman and Fairfax or Berkshire type companies, hard to see those levels again. What’s left? Those FANG stocks everyone’s still raging about. In a way it’s almost an exact domino of the “market top” and how it unfolded. I recall last November people wanting to argue that the market hadn’t seen it’s top because SPY was still elevated. But in hind-site the clear “market” top was around February 2021.

Edited December 16, 2022 by Gregmal

[Spooky]

I'm happy things are taking a turn down, I keep just averaging into some high quality companies I like that I plan to hold long term. I've been buying Constellation Software and the Vanguard Total Canada ETF each paycheck and building up a cash pile to make some bigger moves if prices / sentiment drop significantly again which I hope they do. Where the market goes from here who knows. I think we are in for choppy waters / more volatility ahead for a while and can't count out a second round of tightening from the Fed if inflation is stickier than expected. 

[Gregmal]

In a way it all fits in with this whole “going to where the puck is”. Folks who watched the market saw the top happened and the individual types of stocks took their own time to pass through the meat grinder in ways not uncommon previously. Confidence termites we discussed in summer 2021. The folks who waited and “needed” to see the SPY or whatever reach a definitive top? Lol didn’t fare well and were behind the 8 ball. Same right now. The FANGs? Who cares? They’re last decades leadership group.  Going lower.
 

But I don’t think it’s a stretch to say that more companies than not probably touched their bottoms already. These 2-3% weekly up or down moves don’t really change that. It’s more about sentiment and time passing and risks getting crossed off. Look at a lot of REITs. Same shit. They’re not zeros which was a huge screaming point for a rather large market segment. But not relying on SPY is harder than relying on it. And as such this “bottom” search will continue until we re like 20-30% off and indisputably already well on our way into a new territory.

[TwoCitiesCapital]

12 minutes ago, Gregmal said:

A lot of “the bottom” I suppose depends on what people define as “the market”. There seems to be this wild obsession with S&P levels but that’s not really the most intelligent market marker IMO, for a number of reasons but largely the large cap tech concentration. There’s still plenty of evidence that many smaller tech names bottomed in June. Let’s call em SoftBank/Tiger companies. Some haven’t but a lot hit and moved well off those levels. Since we have seen lots of other, recent example the homebuilders. Even Goldman and Fairfax or Berkshire type companies, hard to see those levels again. What’s left? Those FANG stocks everyone’s still raging about. In a way it’s almost an exact domino of the “market top” and how it unfolded. I recall last November people wanting to argue that the market hadn’t seen it’s top because SPY was still elevated. But in hind-site the clear “market” top was around February 2021.

 

I don't disagree there are variability within individual names. Fairfax is my largest position and has done quite well for me this year. Same with Altius. I've also got quite a lot of exposure to energy and other commodities that have done reasonably well on absolute or relative comparisons. 

 

That being said, I also have a ton of cash and fixed income. A receding tide tends to lower most boats just like a rising tide lifts them. I remember Exor trading for less than the expected cash from its announced sale of Partner RE in 2020 giving you Ferrari, Fiat, CNH Industrial, Juventus, The Economist, etc basically for free.

 

Ultimately the deal DID fall through, but then they just owned an insurance co with a ton of bonds that were going through the roof so the valuation still didn't make sense. The larger point is that stupid cheap often gets even more stupid cheap in market panics. S&P 500 performance is more indicative of market sentiment and psychology than the performance of any individual name and can give clues if cheap is likely to get cheaper. 

 

I think the latter is likely. I'm not 100% certain which is why I still own equity risk, but I've been selling the rallies, buying the dips, and then selling even more into the rallies because if the S&P 500 drops another 20%, most names are going to trade down in sympathy. 

 

 

[dealraker]

Bottoms?  Sling out a number, you'll get more reward and attention for being the lowest of the predictors.   When stuff is falling we obsess over overall market bottom numbers...and when things are going up we obsess over individual stocks.

 

In the long run you won't remember any of either.   Successful investing involves neither of those things.  

 

 

Edited December 16, 2022 by dealraker
spellin'

[Kupotea]

I think it’s pretty much impossible to forecast a market bottom but it’s a lot easier to read existing market sentiment and general positioning. We just went through a 10+ year bull market with a classic bubble blow off. For the most part investors still have an overweighted allocation to equities. The narrative is changing to a recession without a quick FED bailout. There’s plenty of reasons for more fear and selling pressure. Whether that makes sense or not in the long run doesn’t matter because short term sentiment is what matters. One day we’ll run out of sellers and the market will start to climb on bad news and that will be the bottom. I don’t think it’s the worst thing in the world to have a pulse on the market and a macro viewpoint as long as that view remains fluid. 

[Gregmal]

19 minutes ago, Kupotea said:

I think it’s pretty much impossible to forecast a market bottom but it’s a lot easier to read existing market sentiment and general positioning. We just went through a 10+ year bull market with a classic bubble blow off. For the most part investors still have an overweighted allocation to equities. The narrative is changing to a recession without a quick FED bailout. There’s plenty of reasons for more fear and selling pressure. Whether that makes sense or not in the long run doesn’t matter because short term sentiment is what matters. One day we’ll run out of sellers and the market will start to climb on bad news and that will be the bottom. I don’t think it’s the worst thing in the world to have a pulse on the market and a macro viewpoint as long as that view remains fluid. 

There’s probably only a handful of macro guys at the institutional level who are any good at it consistently. And the dirty secret amongst all of them is that they use leverage so as to be almost always invested. When retail investors try it they almost always end up chasing their tails and holding way too much cash for extended periods of time while losing money on their short bets. 
 

This conundrum is all easy to solve. Either use leverage(responsibly) or simply focus on fundamental businesses and assets you understand. Then you can think like a big boy; an owner; versus just some punter who’s petrified of losing 20-30% on a drawdown. That’s been a big theme this year. Punters panic and the big boys pounce. 

[crs223]

6 hours ago, Gregmal said:

Either use leverage(responsibly) or simply focus on fundamental businesses and assets you understand.

 

I’m sure i’m interpreting this wrong, but this is what i read:

 

Option 1: Use leverage on something you don’t understand.

 

Option 2: Don’t use leverage on something you do understand.

[Gregmal]

9 minutes ago, crs223 said:

 

I’m sure i’m interpreting this wrong, but this is what i read:

 

Option 1: Use leverage on something you don’t understand.

 

Option 2: Don’t use leverage on something you do understand.

You can buy brk or and index that’s not heavy into dogshit on margin or with some sort of leverage and then hedge it out. November 2020 I posted a theoretical suggestion 80% long BRK, 30% long MSFT, 10% short ZM. Shit like that.

 

Or you can simply find a handful of things in the personal wheelhouse and really concentrate. Using leverage is a personal decision but I know plenty of people who knew nothing well but one or two things and really turned that expertise into crazy money. 

[UK]

https://www.bloomberg.com/news/articles/2022-12-18/fed-zooms-in-on-american-paychecks-as-it-takes-inflation-battle-into-2023

 

As for the non-housing services that Powell has been highlighting, Omair Sharif — the founder of Inflation Insights LLC — sees plenty of evidence that wage growth hasn’t been the primary driver of inflation there. Prices in that category were mainly driven by increases in transportation and medical care in the first half of the year, which have now reversed, he says. There were a variety of causes, from a sudden surge in the demand for travel to quirks in how health insurance costs are calculated. Wages weren’t a big part of the story, Sharif says. “It’s just ingrained in everybody’s minds somehow that this is how things work.”

[mattee2264]

On 12/16/2022 at 9:30 PM, Kupotea said:

I think it’s pretty much impossible to forecast a market bottom but it’s a lot easier to read existing market sentiment and general positioning. We just went through a 10+ year bull market with a classic bubble blow off. For the most part investors still have an overweighted allocation to equities. The narrative is changing to a recession without a quick FED bailout. There’s plenty of reasons for more fear and selling pressure. Whether that makes sense or not in the long run doesn’t matter because short term sentiment is what matters. One day we’ll run out of sellers and the market will start to climb on bad news and that will be the bottom. I don’t think it’s the worst thing in the world to have a pulse on the market and a macro viewpoint as long as that view remains fluid. 

 

Yeah I think fundamentals (still trading at 20x trailing earnings which are heading lower and possibly a lot lower) and sentiment (still jacked up on hope-ium believing in a soft landing and an imminent Fed pivot) both indicate the bear market has room to run.  

 

There also seems to be a continuing tug of war/whack a mole game between the Fed and the market. The Fed talks tough and markets sell off violently over a week or two. Then there is some economic data that is interpreted favourably or a dovish comment is made by someone related to the Fed and a violent bear market rally. 

 

 

[Gregmal]

6 hours ago, UK said:

Wages weren’t a big part of the story, Sharif says. “It’s just ingrained in everybody’s minds somehow that this is how things work.”

Yup, and this is what’s scary. Just like with COVID, many people just have these “things” in their head. They are targeting and fighting these “things”, when these “things” have pretty much nothing to do with this problem and when they’re told that, they fall back on academic crap that can’t be proven or ideas that are theoretical and just keep making these unsubstantiated claims in perpetuity. 

[dealraker]

Old dealraker's view:

 

Here in the US we did pretty good with the Covid thingy...and still are.  I live in a place where only 30% got a vax, some unexpected deaths and blistered lungs that now require 24/7 O for life came about.  But in the end, given this NEW NEW THING pushed our existing (or lack thereof) models, we did fairly well with it.  

 

This upcoming economic event, the one change repeatedly gives a detailed precise certainty to...and then Greg says, "Well, maybe not..."?   I have one observation:  It is by far, by leaps and bounds, the most predicted inflation/recession market plunge of all my lifetime.

 

We shall see.  

[mattee2264]

We haven't seen major wage inflationary pressures yet because the data is backward looking and people can only bargain for wages annually and it takes a little while for people to realize that their living costs have gone up and therefore their real wages have fallen. But I imagine this December/January most companies will be forced to give major pay increases to keep their staff happy and that will add additional fuel to the inflationary fire. 

 

And really this is what worries people. The root causes of inflation are reasonably temporary (i.e. excessive fiscal and monetary stimulus and supply chain issues and pent up demand from the pandemic) but even as those factors fade in significance because companies and workers have experienced higher costs they adjust by increasing prices and wages and a wage-price spiral can begin that perpetuates inflation.

 

Of course it wont be as bad as the 70s because we are not as unionised or labour intensive but it could still be problematic and require higher rates for longer.

 

 People seem to be assuming that higher interest rates are temporary and inflation will fade in 2023 and we will go back to low interest rates.

 

 It seems to me this could be a parallel error to post GFC when initially people thought that low interest rates were a temporary condition and were too conservative in their valuations as a result. This time round if higher interest rates will similarly persist then market valuations still look unreasonably high. 

[SharperDingaan]

The reality is that retail is pretty clueless, and always has been. Back in the day, HF's used to be very smart ... but now? - not much better than retail. Margining and packaging dogshit to retail in shiny wrappers, claiming they are fully hedged, and blowing up as/when the market moves against 25%+. Mostly smart enough to not be holding the bag when it blows up; but hey bud, WTF happened to those hedges !! 

 

Buying/selling multiple names in any quarter isn't investing, it's addiction. And addiction is a great business! as every reasonably competent legal drug pusher can attest to. There are very few genuinely very good investors, they are almost all contrarian, and for the most part they are all private.

 

Inflation thing. Prices do not go down simply because inflation goes down; lower inflation does not reduce the number of people having to use foodbanks. And inflation driven wage increases, REDUCE the number of people forced to use those foodbanks. The only whining is pensioners whose pension isn't inflation adjusted, and businesses exploiting low cost wages; folks who knew they were taking risks, and believed everyone else should pay for it!  ..... welcome to moral hazard.

 

SD 

 

 

 

 

Edited December 19, 2022 by SharperDingaan

[Gregmal]

I’d also ask the question, if “wages are laggards”…why are we doing the COVID thing again? The selective inclusion of this but not that? What I mean is, these guys wanna raise rates endlessly just claiming wage price spiral, despite zero current or real evidence, simply in theory. They’re giving a lot of credit for things like “it’s a laggard, so we KNOW it’s coming down the line”…meanwhile, equally obvious and significantly more “knowable” laggards, such as housing and rental data, REAL and significant contributors to actual inflation….these same people want to ignore and play the “wait and see” game. Why not just be consistent?

[Dinar]

2 hours ago, SharperDingaan said:

The reality is that retail is pretty clueless, and always has been. Back in the day, HF's used to be very smart ... but now? - not much better than retail. Margining and packaging dogshit to retail in shiny wrappers, claiming they are fully hedged, and blowing up as/when the market moves against 25%+. Mostly smart enough to not be holding the bag when it blows up; but hey bud, WTF happened to those hedges !! 

 

Buying/selling multiple names in any quarter isn't investing, it's addiction. And addiction is a great business! as every reasonably competent legal drug pusher can attest to. There are very few genuinely very good investors, they are almost all contrarian, and for the most part they are all private.

 

Inflation thing. Prices do not go down simply because inflation goes down; lower inflation does not reduce the number of people having to use foodbanks. And inflation driven wage increases, REDUCE the number of people forced to use those foodbanks. The only whining is pensioners whose pension isn't inflation adjusted, and businesses exploiting low cost wages; folks who knew they were taking risks, and believed everyone else should pay for it!  ..... welcome to moral hazard.

 

SD 

 

 

 

 

SD, with all due respect, inflation is another tax on savers/investors/home owners, so it confiscates the wealth of people.  I have nothing against business paying good or above market wages, but I remember how in college economics professors praised inflation since wages are sticky on the downside and inflation allows for wage cuts without actually cutting wages.