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0% Inflation!

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On 3/30/2023 at 2:37 PM, bornontheblue said:

Increased profits are a side effect of inflation , not the cause.  Are gross profit percentages still the same. I am not sure but I bet they are probably similar across most industries. The egg situation is unique because of the avian bird flu.  Thinking that inflation is caused by evil corporate bastards trying to stick it to the middle class is a take for simpletons. Prior to the current inflationary environment we had been trying to fight off deflation since the 08 housing crash. You gonna give the corporate bastards credit for downward pressure on prices in the 15 years prior to today's environment. 

Inflation was caused by : 

1. Over stimulation of the economy with PPP loans , ERC credits, EIDL grants, Stimmy checks and so on ......

2. Bored consumers at home during lockdowns with plenty of money to spend and mostly on tangible goods instead of services which caused supply pressures

3. Supply, and shipping  issues caused by the worlds reaction to Covid

4. The Fed over aggressively reducing interest rates , and then not being fast enough to quickly raise them when there were signs inflation was not a temporary blip. 

5. Contraction of the available supply of labor led by many factors, among them people being paid to not work. 

 

 

 

 

 

1. I don't think it has to be a "side effect vis cause" thing. I think it can be both or either, depending. 

I would rate (3) very highly btw. I think you're also underestimating contraction of the available supply of labor due to less immigration. 

On 3/30/2023 at 2:43 PM, thelawlorfaithful said:

Lol I’m dying here. Journalists are some of the dumbest people In the world. Here’s the quote highlighted for comedy.

The company, which controls about 20% of the US egg market according to Reuters, said its average selling price for a dozen eggs in the quarter ending February 25 was $3.30, more than double the average of $1.61 a year earlier. Despite the higher prices, the total number of eggs it sold edged up 1%, so its overall revenue rose 109% to $997.5 million.

That doubling of revenue was nothing compared to its profits, however. Net income soared to $323.2 million from only $39.5 million a year ago.

Great math there Einstein Menckin. Meanwhile, just looking at the link we can see none of that is true.

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Uh oh, that looks like a company losing its ass. Certainly not one spiking prices to gain a 700% revenue increase in a year with a minor recession and generationally high inflation.

In reality it looks like a company that’s lost it’s ass since 2019 and has become more liquid for flexibility.

The journo’s are lying to you. They think you’re dumb. They might be right.

you're 18 months off, lawlor.  They measure fiscal year May to May and report it that way, not sure how the journo got 2021 vs 2022 data. Regardless, May 2020-May 2021 vs May 2021-May 2022 paints a pretty rosy picture for them, one that supports the journalist being smart and not lying at all. 

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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 3/30/2023 at 11:54 AM, happycamper said:

1. I don't think it has to be a "side effect vis cause" thing. I think it can be both or either, depending. 

I would rate (3) very highly btw. I think you're also underestimating contraction of the available supply of labor due to less immigration. 

you're 18 months off, lawlor.  They measure fiscal year May to May and report it that way, not sure how the journo got 2021 vs 2022 data. Regardless, May 2020-May 2021 vs May 2021-May 2022 paints a pretty rosy picture for them, one that supports the journalist being smart and not lying at all. 

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Operating income is not profits. It’s certainly not an overall revenue increase of 109%. Like, gtfo with that math. You did more work than the journo on a google search. The company expense report shows a company that is drowning. They went from 220 million in profits to 160 in a matter of three years. If you’re not getting up at 4 in the morning to actually take care of the chickens…

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On 3/30/2023 at 12:30 PM, Maji said:

I'm not a fan of the corporate greed explanation of post-covid inflation. Corporations are always greedy by nature. There are many examples of companies prioritizing long-term profitability over expanding supply, but I don't buy that they were less greedy beforehand

Tacit collusion in a market with few players. Inflation gives the cover to raise prices and signals to the few otehr firms to also raise prices. Its not that they are more greedy it is that inflation gave them the cover to raise prices and have the other firms in the market also raise prices that they didn't have before.

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On 3/30/2023 at 12:54 PM, happycamper said:

you're 18 months off, lawlor.  They measure fiscal year May to May and report it that way, not sure how the journo got 2021 vs 2022 data. Regardless, May 2020-May 2021 vs May 2021-May 2022 paints a pretty rosy picture for them, one that supports the journalist being smart and not lying at all. 

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Dates can be confusing.  

If you look at the financial filings of CALM, it did have a big boost in revenue  in the last Q reported 11/30/22.  Post-tax income (profit) was up almost 60% QoQ.  Go to the quarterly tab on the Income Statement.  https://finance.yahoo.com/quote/CALM/financials/

Repeating w/some addition, but it is a large supplier of a product with inelastic demand as implied by the price increases and stable sales data in the article  A quick search back at the 2015 avian flu situation showed the same inelastic demand.   People buy eggs even when prices go up.  Qd diminishes, but at lower % than the price increases.  I'm not surprised at dramatically higher profits and revenues in this recent scenario .  I have seen some reports for other larger egg producers, but again there have been some losers, too.  It's not like the oil industry where some viral contagion left some producers standing while others were shuttered to varying degrees. 

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On 3/30/2023 at 2:11 PM, grandjean87 said:

Dates can be confusing.  

If you look at the financial filings of CALM, it did have a big boost in revenue  in the last Q reported 11/30/22.  Post-tax income (profit) was up almost 60% QoQ.  Go to the quarterly tab on the Income Statement.  https://finance.yahoo.com/quote/CALM/financials/

Repeating w/some addition, but it is a large supplier of a product with inelastic demand as implied by the price increases and stable sales data in the article  A quick search back at the 2015 avian flu situation showed the same inelastic demand.   People buy eggs even when prices go up.  Qd diminishes, but at lower % than the price increases.  I'm not surprised at dramatically higher profits and revenues in this recent scenario .  I have seen some reports for other larger egg producers, but again there have been some losers, too.  It's not like the oil industry where some viral contagion left some producers standing while others were shuttered to varying degrees. 

Not buying that explanation, and not sure why people continue to justify what's going on. What corporation is next in line to gouge and take advantage of Americans? 

https://www.commondreams.org/news/egg-price-gouging-ftc

 

 

 

 

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On 3/30/2023 at 2:32 PM, AztecAlien said:

Not buying this explanation, and not sure why people continue to justify what's going on. What corporation is next in line to gouge and take advantage of Americans? 

https://www.commondreams.org/news/egg-price-gouging-ftc

 

 

 

Go for that command economy.  They work great for all human wants. 

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On 3/30/2023 at 2:35 PM, Maji said:

The 0% was for a month over month reading. There was nothing inaccurate about labeling it as such

Tomorrow's PCE read (I think it's tomorrow) will be interesting.  CPI bump in Feb. and slight Jan. revisions -- will we get some confirmation or reversal w/Feb.'s data.  6.1, 5.6, 5.3, and 5.4% YoY headlines from Oct. - January.  A 4-handle would be nice. 

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On 3/30/2023 at 2:48 PM, grandjean87 said:

Tomorrow's PCE read (I think it's tomorrow) will be interesting.  CPI bump in Feb. and slight Jan. revisions -- will we get some confirmation or reversal w/Feb.'s data.  6.1, 5.6, 5.3, and 5.4% YoY headlines from Oct. - January.  A 4-handle would be nice. 

CPI wise, I see us falling to ~4% at some point this year. Question is what happens after that

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On 3/30/2023 at 2:51 PM, Maji said:

CPI wise, I see us falling to ~4% at some point this year. Question is what happens after that

The CPI is the legacy metric. It gets most of the press.  PCE is probably the better metric.   It's been running, I think, one-half % or thereabouts lower.  It may give the Fed cover to pause in May if it continues a downtrend. 

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On 3/30/2023 at 11:30 AM, Maji said:

I'm not a fan of the corporate greed explanation of post-covid inflation. Corporations are always greedy by nature. There are many examples of companies prioritizing long-term profitability over expanding supply, but I don't buy that they were less greedy beforehand

JMO, my firm basically helps run about 125ish businesses and its definitely a thing for the exact reason you state in your second sentence. Its the opening, the narrative that leads to it. Many of my clients did not have their supply chains effected in anyway but started raising prices once the media narrative was out there. 

In other periods they would have to be more clever and work with others to price control. In this case raising prices is just easy because you have an excuse everyone knows about. 

 

 

 

 

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Question, was 2008 similar to this?  I was overseas, then in college during this period, so the immediate downturn, I literally wasn't here, and then sort of insulated from reality in college on the GI Bill.  Just curious if there is anything that was similar, besides a bunch of money going to corporations?

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On 3/30/2023 at 2:56 PM, grandjean87 said:

The CPI is the legacy metric. It gets most of the press

Very true. Might also have to do with the timing of the releases. PCE is the metric the Fed (officially) looks at though, right? 

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On 3/30/2023 at 1:58 PM, East Coast Aztec said:

Question, was 2008 similar to this?  I was overseas, then in college during this period, so the immediate downturn, I literally wasn't here, and then sort of insulated from reality in college on the GI Bill.  Just curious if there is anything that was similar, besides a bunch of money going to corporations?

It’s not like 2008. We were screwed but in a very different way. The housing crisis which led to a banking crisis meant people couldn’t pay for things they’d bought long term. It was a structural problem where everything collapsed. Here we know what the problem is: too much money for too few goods in a bunch of rapidly changing marketplaces. Unlike 2008, you could see this one coming. We crashed our own economy, for not crazy reasons from my perspective, and the effects will be long and lasting.  

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On 3/30/2023 at 2:58 PM, AztecSU said:

JMO, my firm basically helps run about 125ish businesses and its definitely a thing for the exact reason you state in your second sentence. Its the opening, the narrative that leads to it. Many of my clients did not have their supply chains effected in anyway but started raising prices once the media narrative was out there. 

In other periods they would have to be more clever and work with others to price control. In this case raising prices is just easy because you have an excuse everyone knows about. 

You raise the price to get the maximum benefit. Elasticity plays a part in regulating this, however seeking maximum benefit is human nature. Not wrong or right, just the way we are wired. In the aggregate acting in our own self interest is what our whole economy is built on. You do it many times a day, I do it daily, we all do it. 

 

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On 3/30/2023 at 4:02 PM, bornontheblue said:

You raise the price to get the maximum benefit. Elasticity plays a part in regulating this, however seeking maximum benefit is human nature. Not wrong or right, just the way we are wired. In the aggregate acting in our own self interest is what our whole economy is built on. You do it many times a day, I do it daily, we all do it. 

 

Absolutely. I just think folks who aren't in a role to see it directly don't realize humans take every opportunity presented...including a public narrative that may have little to no impact on their actual business or market. Obviously they cant raise prices too much or they harm themselves, but certainly expectations can create the space for marginal increases. My experience is anecdotal but it's with enough business that I know its probably common elsewhere. 

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On 3/30/2023 at 5:34 PM, AztecSU said:

Absolutely. I just think folks who aren't in a role to see it directly don't realize humans take every opportunity presented...including a public narrative that may have little to no impact on their actual business or market. Obviously they cant raise prices too much or they harm themselves, but certainly expectations can create the space for marginal increases. My experience is anecdotal but it's with enough business that I know its probably common elsewhere. 

You are a CPA right? 

We see it going on in our own industry. A lot of boomers retiring out, fewer young people coming up. There is a shortage of of CPAs right now. 

We are having to turn down a lot of work, and be very picky about who we do add as clients. We have definitely raised our prices. 

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On 3/30/2023 at 2:51 PM, Maji said:

CPI wise, I see us falling to ~4% at some point this year. Question is what happens after that

4-handle in core PCE for February -- 4.6% YoY and down to 0.3% monthly.  Below the est.   Headline was 5.0 YoY and the same 0.3 MoM.  Market seems to like, but there is some big political news today so...

Decent news at first glance.  I'll look at the breakouts after some caffeine. 

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On 3/30/2023 at 7:50 PM, bornontheblue said:

You are a CPA right? 

We see it going on in our own industry. A lot of boomers retiring out, fewer young people coming up. There is a shortage of of CPAs right now. 

We are having to turn down a lot of work, and be very picky about who we do add as clients. We have definitely raised our prices. 

The same thing is true in engineering overall. We're a lot more able to pick and choose more profitable sectors as well. Our company is offering a big referral bonus to employees.

 

On 3/31/2023 at 9:57 AM, grandjean87 said:

4-handle in core PCE for February -- 4.6% YoY and down to 0.3% monthly.  Below the est.   Headline was 5.0 YoY and the same 0.3 MoM.  Market seems to like, but there is some big political news today so...

Decent news at first glance.  I'll look at the breakouts after some caffeine. 

So... is the 2% the Fed wants a reasonable goal? Should we be looking at something like 3% more long term?

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On 3/31/2023 at 8:26 AM, happycamper said:

The same thing is true in engineering overall. We're a lot more able to pick and choose more profitable sectors as well. Our company is offering a big referral bonus to employees.

 

So... is the 2% the Fed wants a reasonable goal? Should we be looking at something like 3% more long term?

I'm more with 2% being a soft target.  Anything close or moving towards.  I'm as worried about Fed overshoot on the tightening as many others.  

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