Where Are The ET Inflation Bulls???
- Thread starter Landis82
- Start date
<i>"Yet, most of the commodity complex is now trading LOWER than it was back on January 24th when Bernanke started aggressively injecting liquidity into the banking system.
Why is that? You never answered the question."</i>
Has anyone here other than me ever traded commodities? Seriously, all kidding aside.
For the lurkers who may be perplexed about this, Bear Stearns is being unwound to the tune of $billions wherever something of value can be gleaned. Can we assume some of those are margin calls cascading in the commodities, of which massive selling began with BSC collapsing to begin with?
None of that has anything to do with rampant, blatant inflation. Despite the fed's (necessary) blatant lies, inflation is ramping. No one needs explain that fact any further than previous.
Oh what the heck... I have some time. Quit trading for the day at 10:02am est up +9pts ER2. Here's a true story to belabor the point.
*
Sunday I had dinner with a local lady who runs a thriving small business baking pies and pastries. She sells 10,000s of pies out of her home = bakery each year, been featured on the Food Channel, various magazines, etc. Famous for her grape pies (local thing) and many other goodies.
Pie prices have been $10 ~ $12 last two years, depending on which variety of fruit. Just last year that provided a nice profit margin to run the business, meet payroll, everything.
This year her cost of production will be higher than $12 gross. Flour, cooking oil and fruits are thru the roof and into the stratosphere. She has to raise prices now to $16 - $20 per pie just to make similar profit as past two years.
Inflation worries just ended because the Dow squeezed +400pts yesterday (now giving back -100pts) on a fed-injected ramp? We're all done with consumer price pressure across the board here in the U.S. now?
I swear, it's like reading essays from sixth graders in this site more often than not.
Why is that? You never answered the question."</i>
Has anyone here other than me ever traded commodities? Seriously, all kidding aside.
For the lurkers who may be perplexed about this, Bear Stearns is being unwound to the tune of $billions wherever something of value can be gleaned. Can we assume some of those are margin calls cascading in the commodities, of which massive selling began with BSC collapsing to begin with?
None of that has anything to do with rampant, blatant inflation. Despite the fed's (necessary) blatant lies, inflation is ramping. No one needs explain that fact any further than previous.
Oh what the heck... I have some time. Quit trading for the day at 10:02am est up +9pts ER2. Here's a true story to belabor the point.
*
Sunday I had dinner with a local lady who runs a thriving small business baking pies and pastries. She sells 10,000s of pies out of her home = bakery each year, been featured on the Food Channel, various magazines, etc. Famous for her grape pies (local thing) and many other goodies.
Pie prices have been $10 ~ $12 last two years, depending on which variety of fruit. Just last year that provided a nice profit margin to run the business, meet payroll, everything.
This year her cost of production will be higher than $12 gross. Flour, cooking oil and fruits are thru the roof and into the stratosphere. She has to raise prices now to $16 - $20 per pie just to make similar profit as past two years.
Inflation worries just ended because the Dow squeezed +400pts yesterday (now giving back -100pts) on a fed-injected ramp? We're all done with consumer price pressure across the board here in the U.S. now?
I swear, it's like reading essays from sixth graders in this site more often than not.
No one doubts that the price of wheat for pies (esp pizza--anyone check out the prices of Minneapolis spring wheat lately?) and gas for cars have increased.
But are these signs of SYSTEMIC inflation reminiscent of the 1970's?
I don't think so. Much of the rise in the price of commodities can be traced to speculation, the same kind that took hold of stock prices in the late 1990's and real estate in the early 2000's (Let's go flip that house on A&E!). The Fed can be blamed in part for all of those bubbles. Indeed, they may well have been intentional.
Bernanke is an academic--as am I--who has studied the Great Depression, and anyone who has studied that worldwide catastrophe knows that one of its precursors was real estate speculation, bad loans, and bank failures.
The fear right now is that real estate could keep ticking down and down, for years on end. That is deflation.
Does the Fed give two hoots about Joe Six Pack (not the abs kind) paying more for his Double Whopper?
No, but if Joe cannot make his mortgage payments if he loses his job, and then his bank has to sell his home, dumping it on the market along with countless others, that would be a problem.
Deflation, not inflation, is the Fed's primary fear. Dr. Bernanke still has to talk tough about inflation, but he knows that recessions can turn into depressions if the money spigot is turned off.'
So he'll keep the money flowing.
But are these signs of SYSTEMIC inflation reminiscent of the 1970's?
I don't think so. Much of the rise in the price of commodities can be traced to speculation, the same kind that took hold of stock prices in the late 1990's and real estate in the early 2000's (Let's go flip that house on A&E!). The Fed can be blamed in part for all of those bubbles. Indeed, they may well have been intentional.
Bernanke is an academic--as am I--who has studied the Great Depression, and anyone who has studied that worldwide catastrophe knows that one of its precursors was real estate speculation, bad loans, and bank failures.
The fear right now is that real estate could keep ticking down and down, for years on end. That is deflation.
Does the Fed give two hoots about Joe Six Pack (not the abs kind) paying more for his Double Whopper?
No, but if Joe cannot make his mortgage payments if he loses his job, and then his bank has to sell his home, dumping it on the market along with countless others, that would be a problem.
Deflation, not inflation, is the Fed's primary fear. Dr. Bernanke still has to talk tough about inflation, but he knows that recessions can turn into depressions if the money spigot is turned off.'
So he'll keep the money flowing.
http://kb.esignalcentral.com/display/2n/kb/article.asp?aid=2848&n=5&s=
KC and SB for Coffee and Sugar (#11).
KC and SB for Coffee and Sugar (#11).
makloda / landis,
I developed a significant precious metal stake before August 2007.
I have spent many hours studying financial markets history. In my reading I discovered that there is a fairly strong correlation between the price of gold in 'US Dollars' and the real 'US Dollar' interest rate.
This is the inflation argument put forward by many. Nothing much has changed since gold was 1,030 'US Dollars' an ounce earlier this week. I think it is reasonable to expect that there are some profit-takers after a 60% gain from the August 2007 low.
Over the last year I have read a lot of article by Michael Shedlock (Mish) and he has put forward a view that states that gold does well not only in times of significant inflation, but also in deflationary periods.
This is because gold is a store of value, and carries less credit risk than a bank deposit.
I agree with smilingsynic - that Bernanke is trying to avoid deflation at all costs. So I think it is likely that M3 money supply will continue to grow, leading to significant monetary inflation.
For example, I don't put it past Bernanke to print money in order to expand the Federal Reserve's balance sheet so that it can buy toxic waste from the banks and brokers.
However I am open to the idea that the Federal Reserve is impotent, and that deflation may occur, despite the Fed's best efforts. In that case, gold could decline against the 'US Dollar', however it would still outperform equities.
I developed a significant precious metal stake before August 2007.
I have spent many hours studying financial markets history. In my reading I discovered that there is a fairly strong correlation between the price of gold in 'US Dollars' and the real 'US Dollar' interest rate.
This is the inflation argument put forward by many. Nothing much has changed since gold was 1,030 'US Dollars' an ounce earlier this week. I think it is reasonable to expect that there are some profit-takers after a 60% gain from the August 2007 low.
Over the last year I have read a lot of article by Michael Shedlock (Mish) and he has put forward a view that states that gold does well not only in times of significant inflation, but also in deflationary periods.
This is because gold is a store of value, and carries less credit risk than a bank deposit.
I agree with smilingsynic - that Bernanke is trying to avoid deflation at all costs. So I think it is likely that M3 money supply will continue to grow, leading to significant monetary inflation.
For example, I don't put it past Bernanke to print money in order to expand the Federal Reserve's balance sheet so that it can buy toxic waste from the banks and brokers.
However I am open to the idea that the Federal Reserve is impotent, and that deflation may occur, despite the Fed's best efforts. In that case, gold could decline against the 'US Dollar', however it would still outperform equities.
Quote from Landis82:
For your information, I did make that trade and I was stopped out at $14.00
Is there a problem with that?
Had to go back and rethink that one, a Leroy.
Quote from Landis82:
The FED is PUMPING, PUMPING, and PUMPING liquidity into the system and yet commodities are COLLAPSING?
This doesn't "fit" the theories of all of the ET Inflation "anti-Helicopter Ben" Bulls?
What happened?
LOL!
A sudden halt should not mislead you. When the economy adjusts its self, you will feel like a moron!!!