Not to begin at the end here, but have you been watching the December coffee prices over on the commodity side of things? (Link to a chart here). Back in March at the life of contract lows, coffee was under $113. Now, as the close yesterday, it was up over $140. I may not be completely awake yet, since caffeinated miracle juice is just now going to work, but that works out to pretty close to 24% inflation. Oh, did I mention that’s for six months?
Let’s see how that would annualize, shall we? OK, forget it if you’re not up to it. We;ll say something over 50% if the rate of increase were to continue. And there are lots of other commodities which are showing pretty hefty implied inflations.
So much so, in fact, that Dr. Marc Faber of the “Gloom Boom, & Doom Report” is telling Bloomberg that US inflation will approach Zimbabwe levels. Unfortunately, I can’t fault his logic.
When a country gets into the position that the US is now in – namely buying its debt from itself to keep that dollar from tanking – it’s a sure sign that big changes in the value of the dollar are ahead.
While its true that gold took a bit of a beat down on Tuesday, a simple look at the calendar will explain what was going on: It was end of contract time and it’s normal lately to see prices drop around delivery time. Does that mean inflation risk is gone? You are kidding, right?
Then there’s the little matter of Consumer Confidence which came out Tuesday higher than expected. Want a simple explanation of what’s going on right now? The strong hands may be selling to the weak.
If you look at a three-month chart over at Yahoo Finance, you’ll see that 8,574 is the overhead resistance level. About the least surprising outcome for the market here over the next week or two – at least to my way of looking at it – would be to see a rally at the open this morning – momentum follow-through – and then a mid-session reversal as the market runs out of motivation.
Existing Home Sales are due out this morning – and these, coupled with data tomorrow on the new unemployment claims – which may be higher than anticipated – and then Friday’s GDP numbers all set us up for the real biggies to come next week when we get Personal Incomes on Monday and then next Friday we see the new monthly unemployment numbers which I’m throwing a dart at 9.3% on right now.
If the home sales are good, we might get a double top off that 8,574 level. If they’re bad, nervousness in general could re-enter the market; so many people have turned bullish lately (mostly without solid thinking, I’d add) that it wouldn’t surprise me in the least.
There is one thing to keep an eye on, though. That’s how inflation will work on the sales of American retailers. We know that retail has been having a very tough go of things, but when the figures come out be sure when you’re looking at same-store sales, that you add in something for an inflation correction. I get a kick out of seeing reports like ‘same-store sales are up 2%” and then when exploring the data finding that it’s not been inflation corrected. So that with 2 1/2% inflation, a 2% increase in dollars handled really means on a constant-dollar basis, sales are down half a percent – that kind of thing – using imaginary numbers to make the point.
But it illustrates how most folks are led around blindly on matters about money. Scary stuff, to be sure. But, with a little deliberate and clear thinking, one can see that the only way out of this mess will be inflation – eventually – as long as the government can get its hands on paper and ink. Which is why Marc Faber’s comments about Zimbabwe here may be spot on.
What’ll be interesting to watch is to see how many people will be ready for it. With all the ways folks can hedge by simple means: Drive a high mileage car to keep energy costs low, plant a garden to hedge food costs, and work extra-hard to increase your chances of keeping your job if you have one – all that stuff seems to sneak up on people.
I’m always amazed by the number of folks who prepare resumes only after being fired, too. Seems we live in a reactive rather than proactive mental construct. Which, when you think about it, is why most people are where they are now.
So we have China warning us about printing money now. The Chinese may be inscrutable, but they are not unscrewable – and since they hold oodles and piles of US paper with zeroes on it, they have every right to be concerned. Ink-think I call it.
Up in Columbus Ohio, you can see how budgets are hemming in big cities. Columbus is looking at all kinds of cuts in their police department, just for example. No, California is not alone going to the wall in this mess.
Oh – and the OPEC’ers want their oil to fetch $70 to $80 a barrel. Someone’s got to pay for that fancy ice-skating rink in the desert and that would be…you!
Is Social Networking an “Industry”?
I have to admit I am stumped why people have Facebook accounts. Oh sure, I have one, too, but I’ve only added a few folks I know here in East Texas – and sorry, but I don’t have time to be reading up on the latest thoughts of hundreds of people. A sort of cacophony.
I think I’ve looked at it maybe once or twice. Didn’t see any particular reason to spend time there.
Russians may be smarter than me,. however, since I see where they’ve dumped $200-million into Facebook. But is social networking a business? I mean bigger than Starbucks, Molson/Coors, Hormel, or AMD as the NY Post graphic says?
Remember last week I was telling you how I’d given up pinching myself and had just put a pair of ViceGrips on either arm – things were getting that crazy in the world? Today I’ve ordered a case of ViceGrips. Please don’t send me an ‘add friend’ list. If I need to get hold of you I’ll call or send an email. You do the same, OK?
If I want to hear snips of people’s lives at random, I’ll just go walk around Wal-Mart and listen to the crap people spew into their cell phones without regard to innocents abroad like me. Yeah, grouchy George. You bet.
And the Winner Is…
“‘Sexting’ no worse than spin-the-bottle: study.” And you thought the 78th Congress of the Humanities and Social Sciences would be irrelevant? Ho boy…
Text Change Operations
And, you saw where “Twitter posts risks for newspapers”?
Korea’s December Nukes
As long as we’re sitting here waiting for a possible attack by North Korea on the South in December, we might as well read about how they have apparently restarted their N-plant to make more weapons grade material.
Oh look - there goes another NK missile test.
You notice that I’m not the only one who’s thinking the North will lob something south? “Russia fears Korea conflict could go nuclear…“
“Israel document: Venezuela sends uranium to Iran.“ Yeah…and? Remember Nigerian uranium?
“The Blob” Found
Sounds like something off a supermarket checkout line tabloid, huh? But, no, it’s for real. Somewhere under Nevada…
Tennessee Gun Laws
Forgot to mention that folks in Tennessee have a new law that says if a person legally possesses a gun they will NOT have it seized in any period of martial law. RFO (right frigging on…) Someone learned something from KatRita, huh?
Fiddling on the Roof
You see where “Obama’s green guru calls for white roofs” to fight global warming? Let me reflect on that for a minute.