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0% Inflation!

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Baltic Dry Index is down 2/3rds from a year ago.  Hit lows of 2020 recently.  China shutdowns a factor, but also some global demand destruction likely.  It's a weird time.  Normally, w/commodities mostly rolled over and ISMs dipping it would say a disinflationary recession in nigh.  I'm going to wait on that for a bit.  

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On 10/3/2022 at 5:29 PM, thelawlorfaithful said:

Your gallows humor is a good addition to the board.

 

On 10/3/2022 at 6:14 PM, grandjean87 said:

Baltic Dry Index is down 2/3rds from a year ago.  Hit lows of 2020 recently.  China shutdowns a factor, but also some global demand destruction likely.  It's a weird time.  Normally, w/commodities mostly rolled over and ISMs dipping it would say a disinflationary recession in nigh.  I'm going to wait on that for a bit.  

I've read a few takes that the fed is being so anti-inflationary that they're pushing us towards a possibly unnecessary recession, or at the least, exacerbating a coming recession with higher unemployment and wage destruction than we'd see otherwise. Essentially saying the fed was carrying themselves with a bit of... call it hubris, like they have an inflation button they can push with no unintended consequences or runaway problems. 

Any reads on you guys from that? 

Remember that every argument you have with someone on MWCboard is actually the continuation of a different argument they had with someone else also on MWCboard. 

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On 10/4/2022 at 4:08 AM, happycamper said:

 

I've read a few takes that the fed is being so anti-inflationary that they're pushing us towards a possibly unnecessary recession, or at the least, exacerbating a coming recession with higher unemployment and wage destruction than we'd see otherwise. Essentially saying the fed was carrying themselves with a bit of... call it hubris, like they have an inflation button they can push with no unintended consequences or runaway problems. 

Any reads on you guys from that? 

There are economists with the takes that the Fed was too late in raising rates and beginning real QT (the large bond roll off just began this  last month), and now looking like Powell and the FOMC will be late to pause/slow/coast/reverse.  Actually, listening to some commentary right now on the Australian CB appearing to pause its tightening.   

I am as baffled as ever.  There is still a huge amount of stimulus still in the system although liquidity appears to be an anchor. Europe faces a difficult winter in fuel costs and scarcity. Does China continue regional lockdowns this fall and winter?

I'm in the camp of "don't cause a recession just to fix inflation".  I think the risk is less to keep the macro economy growing even with with 4-5% inflation vs. sticking doggedly to the target 2% and risk a real recession.   

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On 10/4/2022 at 9:57 AM, grandjean87 said:

There are economists with the takes that the Fed was too late in raising rates and beginning real QT (the large bond roll off just began this month), and now looking like Powell and the FOMC will be late to pause/slow/coast/reverse.  Actually, listening to some commentary right now on the Australian CB appearing to pause its tightening.   

I am as baffled as ever.  There is still a huge amount of stimulus still in the system although liquidity appears to be an anchor. Europe faces a difficult winter in fuel costs and scarcity. Does China continue regional lockdowns this fall and winter?

I'm in the camp of "don't cause a recession just to fix inflation".  I think the risk is less to keep the macro economy growing even with with 4-5% inflation vs. sticking doggedly to the target 2% and risk a real recession.   

Yeah that was more or less my take as well. 10% inflation is a nightmare. but 4-5% for a few years... not great. but a hell of a lot better than unemployment. 

that said I pay a lot less attention to the market than you guys and also, when I hear left leaning guys critique the fed I always but always look for other opinions. 

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Remember that every argument you have with someone on MWCboard is actually the continuation of a different argument they had with someone else also on MWCboard. 

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On 10/4/2022 at 3:08 AM, happycamper said:

 

I've read a few takes that the fed is being so anti-inflationary that they're pushing us towards a possibly unnecessary recession, or at the least, exacerbating a coming recession with higher unemployment and wage destruction than we'd see otherwise. Essentially saying the fed was carrying themselves with a bit of... call it hubris, like they have an inflation button they can push with no unintended consequences or runaway problems. 

Any reads on you guys from that? 

They might be making the wrong decisions that will lead to bad consequences. I don’t think they’re pushing for a recession in a Machiavellian way. Our biggest trade partner are insane jerks obsessed with locking things down to protect their image. Two of the biggest grain producers besides ourselves are engaged in a horrible war. Employment is high, productivity is down, people have less money than before due to extended inflation. A soft landing is a tough ask. Powell might be getting it wrong but I don’t think it’s intentional. A hard rain is gonna fall no matter what.

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We’re all sitting in the dugout. Thinking we should pitch. How you gonna throw a shutout when all you do is bitch.

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On 10/4/2022 at 11:30 AM, thelawlorfaithful said:

They might be making the wrong decisions that will lead to bad consequences. I don’t think they’re pushing for a recession in a Machiavellian way. Our biggest trade partner are insane jerks obsessed with locking things down to protect their image. Two of the biggest grain producers besides ourselves are engaged in a horrible war. Employment is high, productivity is down, people have less money than before due to extended inflation. A soft landing is a tough ask. Powell might be getting it wrong but I don’t think it’s intentional. A hard rain is gonna fall no matter what.

nah i didn't think it would be intentional. if nothing else the people running the feds live in the economy too. a recession would be worse for us than for them, but it still wouldn't be a goal for them.

Remember that every argument you have with someone on MWCboard is actually the continuation of a different argument they had with someone else also on MWCboard. 

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On 10/13/2022 at 9:18 AM, grandjean87 said:

I'd have to look at the Dec. '21 data, but that was before much of the YoY (from '20) spike so probably 6% YoY not in play. 

Not an attack on you. It’s a transitory complaint against these geniuses.

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We’re all sitting in the dugout. Thinking we should pitch. How you gonna throw a shutout when all you do is bitch.

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On 10/13/2022 at 10:26 AM, thelawlorfaithful said:

Not an attack on you. It’s a transitory complaint against these geniuses.

Transitory went by the wayside awhile back.  What will be interesting is what the YoY figures look like in early '23 when new price levels are compared to their respective months from '22. 

 

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On 10/13/2022 at 9:58 AM, grandjean87 said:

Transitory went by the wayside awhile back.  What will be interesting is what the YoY figures look like in early '23 when new price levels are compared to their respective months from '22. 

 

If by interesting you mean everything remains expensive so hooray…

image.gif.f15238d4a65a67113d4e05823526e977.gif

We’re all sitting in the dugout. Thinking we should pitch. How you gonna throw a shutout when all you do is bitch.

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On 10/13/2022 at 9:27 AM, thelawlorfaithful said:

Don’t think we’re hitting 6% by the end of the year, Goldman. 

image.gif.b19648ef9711010a2c20b9b8fb1cb7db.gif

good shot of falling into the high 7s% YoY next report. 6% by end of year is ofc a much different matter

 

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On 10/13/2022 at 11:23 AM, thelawlorfaithful said:

If by interesting you mean everything remains expensive so hooray…

image.gif.f15238d4a65a67113d4e05823526e977.gif

Math.  If something goes up 10% and stays there it's still up 10%.  But, eventually you are comparing to a higher base and that 10% goes away. I'm not rooting for deflation. 

Btw:  All items CPI was up 0.2% MoM from August -- 2.4% annualized. I don't think that trend holds, but monthly prints have the deficit of being monthly.  
 

 

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On 10/13/2022 at 10:37 AM, grandjean87 said:

Math.  If something goes up 10% and stays there it's still up 10%.  But, eventually you are comparing to a higher base and that 10% goes away. I'm not rooting for deflation. 

Btw:  All items CPI was up 0.2% MoM from August -- 2.4% annualized. I don't think that trend holds, but monthly prints have the deficit of being monthly.  
 

 

Is something stays shitty on a long enough timeline shitty just becomes the way it is. I’m starting to get this math thing.

We’re all sitting in the dugout. Thinking we should pitch. How you gonna throw a shutout when all you do is bitch.

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On 10/13/2022 at 12:05 PM, thelawlorfaithful said:

Is something stays shitty on a long enough timeline shitty just becomes the way it is. I’m starting to get this math thing.

Hey, used cars and trucks are down for the 4th month in a row.  Pork chops, hamburger, and ice cream also dipped since August. Yum. 

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On 10/13/2022 at 11:11 AM, renoskier said:

and housing prices are dropping 

Precipitously so in many places too…lol

also anecdotally seeing rents starting to fall a bit…nothing huge but they appear lower than the recent peak…at least in this area…lol

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Personally and from an energy perspective - I don't see inflation going away anytime soon.  Massive underinvestment in energy since about 2014 created this. Energy prices will increase causing the price of goods and services to continually increase. Demand for consumer goods will go down (people won't be able to afford them) causing job losses and recession in my opinion. I'm no economist but it will be a tough upcoming year.

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