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2021 - Is inflation finally back in the conversation?


Reagan1k

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Just now, Upgrayedd said:

Was this really unexpected y/y?  At least the m/m isn’t a full point.

I thought I read that they were expecting a slight drop on y/y?  Can't remember, I was lubing up for the 'bama game at the time and wasn't exactly at my normal AM cognitive level (which isn't all that great to start with).

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4 minutes ago, Upgrayedd said:

Was this really unexpected y/y?  At least the m/m isn’t a full point.

I fully expected YoY cpi to come in under 8, so 8.3 was a really bad number from my perspective.  Now I am thinking about joining those that are worried they’re gonna crash the plane to avoid flying too high.

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The food and shelter costs are sticky and rising.  Do we have a strategic food or shelter reserve anywhere that we can use to artificially lower prices for a couple of months?  

This sucks and isn't going anywhere.  The demand destruction required, which if you really get down to it results in poor people eating less, is morally reprehensible.  Food, labor, and energy shortfalls.  Godfuckingdamnit.

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13 minutes ago, jimmyjazz said:

I thought I read that they were expecting a slight drop on y/y?  Can't remember, I was lubing up for the 'bama game at the time and wasn't exactly at my normal AM cognitive level (which isn't all that great to start with).

CPI expected MoM -0.1. Actual +0.1

Core expected MoM +0.3. actual +0.6 

YoY numbers were 8.3 and 6.3. 

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Feels like this inflation is going to be stickier than the Fed thinks.  I just don’t see where any of the usual levers to slow things down work, which means raising rates more and more and more.  Municipal bonds are going to start above 6 soon and that will cascade through a lot of local government spending.

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4 hours ago, Humble Beast said:

CPI 8.3 Core 6.3

 

Welp. Fortunate that they’re draining the strategic petroleum reserve at record rates, otherwise could’ve been very hot. They have to stop that at some point, around midterms I would think. 

The strategic oil reserves draw stops in late October. Gas prices won’t rise until after the election. 

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6 minutes ago, Humble Beast said:

From the preferred Fed media mouthpiece. 
 

Odds of 100 bps hike increasing 

I said it a long damn time ago, but the FED should've ripped off the band-aid and done 2 100bps raises on the first 2 cycles.  We'd likely be in a similar situation market wise, but with more certainty rather than uncertainty.  They played this terribly and we're all gonna pay for it.  

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5 hours ago, Trey3216 said:

I said it a long damn time ago, but the FED should've ripped off the band-aid and done 2 100bps raises on the first 2 cycles.  We'd likely be in a similar situation market wise, but with more certainty rather than uncertainty.  They played this terribly and we're all gonna pay for it.  

I think they've played it just really slow. I think the 75 bips increases are fine, they just started so late.

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I think the rate increases are unnecessary pain to the economy, absent coherent budgeting from the government. No CR. 

(In the early ‘80s, the federal budget tempo was for the WH to propose a budget to Congress, which, led by the majority party, would use it as a starting point. Lot of politics and horse-trading, lot of rhetoric and lying, and …voila, there would be a vote and budget passes. Sometimes good sausage, sometimes bad. Now, we have Cingresses and Presidents unwilling to make the hard slog, and so Congress issues resolutions and the President issues Executive Orders, and nobody cares about the bottom line. This is a lot of words to getting to these points:

1. The Volcker approach may not work anymore. 
2. There is no other approach known, to try. )

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1 hour ago, statsman said:

I think the rate increases are unnecessary pain to the economy, absent coherent budgeting from the government. No CR. 

(In the early ‘80s, the federal budget tempo was for the WH to propose a budget to Congress, which, led by the majority party, would use it as a starting point. Lot of politics and horse-trading, lot of rhetoric and lying, and …voila, there would be a vote and budget passes. Sometimes good sausage, sometimes bad. Now, we have Cingresses and Presidents unwilling to make the hard slog, and so Congress issues resolutions and the President issues Executive Orders, and nobody cares about the bottom line. This is a lot of words to getting to these points:

1. The Volcker approach may not work anymore. 
2. There is no other approach known, to try. )

I'd buy that if 1) we haven't spent essentially the past decade spending like madmen while keeping sub 2% inflation and 2) this wasn't a global phenomenon.

I think the pandemic caused a massive shift that has created all sorts of upheaval and change and inflation is a byproduct of that. 

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14 minutes ago, FirstTimeCaller said:

I think the pandemic caused a massive shift that has created all sorts of upheaval and change and inflation is a byproduct of that.

No question. But it's not like we didn't see it coming. Why continuing pushing new spending on one hand while trying to kill growth on the other? Shouldn't the FED and the Government have similar strategies? 

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5 minutes ago, Cheeseweasel said:

No question. But it's not like we didn't see it coming. Why continuing pushing new spending on one hand while trying to kill growth on the other? Shouldn't the FED and the Government have similar strategies? 

What's the new spending that's already taken hold that would be shown in the current inflation numbers?

Policy aside, you wouldn't see it yet from things like student loan forgiveness or the IRA if you think those are going to be major drivers of inflation.

 

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5 minutes ago, FirstTimeCaller said:

What's the new spending that's already taken hold that would be shown in the current inflation numbers?

 1.9 Trillion "American Rescue Plan" plus Ukraine. (Not blaming the last 2 years of spending, just the disconnect between this administration and the FED)

But the reality of our Economy is that it becomes a self-fulfilling prophecy. Businesses "feel" costs are going up, so they raise prices in anticipation. 

 

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49 minutes ago, FirstTimeCaller said:

What's the new spending that's already taken hold that would be shown in the current inflation numbers?

Policy aside, you wouldn't see it yet from things like student loan forgiveness or the IRA if you think those are going to be major drivers of inflation.

 

Lots of commodity prices are set by futures trading. Spending to come absolutely has an impact on prices now. 

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4 minutes ago, StassneyHorn said:

Oh shut the fuck up, if anyone is Aggy it’s your jackass thinking they’re in the same ballpark or that providing Ukraine aid is shitty behavior, ya fucking muppet.

If you are cool with pissing away money, then stop bitching about inflation and enjoy the ride. It's built SOOOOOO much better!

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4 hours ago, Cheeseweasel said:

But the reality of our Economy is that it becomes a self-fulfilling prophecy. Businesses "feel" costs are going up, so they raise prices in anticipation. 

100% - In my industry, many have moved from reactionary price increases to anticipatory price increases and they'll continue as long as the market will tolerate it.

Increases began as targeted and specific pricing moves.  These days, it appears someone wakes up one day and says fuck it, let's go up 15% and see if anyone blinks.

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3 minutes ago, Reagan1k said:

Increases began as targeted and specific pricing moves. 

FWIW, we've been thru almost a decade of stagnant prices. We've had a few products that needed increasing but have been hesitant to raise prices because of the pushback from customers. In fact, the norm for the last decade has been "we expect to see a yearly decrease in prices" from many large customers. Once the script flipped, it was 10 years of dammed up water flowing through the valley. 

 

6 minutes ago, Reagan1k said:

These days, it appears someone wakes up one day and says fuck it, let's go up 15% and see if anyone blinks.

"Oh, no one blinked at 15%, must need to push to 20%."

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27 minutes ago, Cheeseweasel said:

FWIW, we've been thru almost a decade of stagnant prices. We've had a few products that needed increasing but have been hesitant to raise prices because of the pushback from customers. In fact, the norm for the last decade has been "we expect to see a yearly decrease in prices" from many large customers. Once the script flipped, it was 10 years of dammed up water flowing through the valley. 

Who is "we"?  Your business, or more of the King's "we"?

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24 minutes ago, Cheeseweasel said:

FWIW, we've been thru almost a decade of stagnant prices. We've had a few products that needed increasing but have been hesitant to raise prices because of the pushback from customers. In fact, the norm for the last decade has been "we expect to see a yearly decrease in prices" from many large customers. Once the script flipped, it was 10 years of dammed up water flowing through the valley. 

 

"Oh, no one blinked at 15%, must need to push to 20%."

The only people seeing pushback are the ones facing the end user who's asking WTF.  Everyone else just takes an increase, tacks on a few points for themselves, and passes it through for someone else to pay.  Last man standing in the commerce flow has to explain it to the end user.

Edited by Reagan1k
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3 minutes ago, jimmyjazz said:

Just asking, because my favorite troll has routinely castigated my observations that, up through 2020 or so my personal spending didn't really move much.

That is no longer true.

Thinking back, the last HUGE price increases I can recall in manufacturing was during the Gulf War when steel pricing went crazy. I'm sure people buying real estate would disagree, but from a manufacturing view, prices have been very steady (1-2% here and there / occasional blip when commodity prices fluctuated, but never "sticky".

That is indeed no longer true. My biggest fear for the consumer is that this round of inflation feels "sticky". It's going to take a major recession to see prices return to pre-2021 levels, if ever.

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Based on my observations / experiences, a lot of the inflation I've seen is protective in theory at the quotation level, but becomes very sticky once a PO is cut.

It doesn't take getting burned too many times before I throw on some lagniappe into your price with the idea that it'll cover me if I get whipsawed.  The fact that 10-20% of that price was lagniappe is easy to forget when the PO comes in and I don't go back and true-up based on factual pricing.

Holy shit, I can't believe they bought this.........instead of .........Hey, that price has some fluff in it I can trim out now.

That's the nature of a true inflationary spiral.  Getting cash out of your hands as quickly as possible and converted into something that'll be inflationary - regardless of the actual underlying input costs.

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