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2021 - Is inflation finally back in the conversation?


Reagan1k

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https://www.cnbc.com/2022/12/23/supply-chain-managers-expect-problems-continue-2024.html

 

Disappointing article about the future of the supply chain.   Let's hope this is over pessimistic and relief is found.

(excerpt)

More than half of logistics managers at major companies and trade groups say they do not expect the supply chain to return to normal until 2024 or after, according to a new CNBC survey.

Sixty-one percent of respondents said their current supply chain is not operating normally, compared with 32% that said it is functioning normally. When questioned when they see a return to normalcy, 22% were unsure, 19% said 2023, and 30% said 2024.

Another 29% said in or after 2025, or never.

 

 

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I honestly don’t think they really know. But those numbers layered together with advanced math show close to 50% say it’s fine now, next year or fuck it they don’t know. I also think supply chains are not all related - some interrelated - but not entirely.  

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  • 3 weeks later...
Wall Street/Banks consensus is that December CPI reading tomorrow will come in flat or even slightly negative MoM. YoY change expected to drop from 7.1% to 6.5%.
FmM2dzxXEAsmGPo?format=jpg&name=large

6.5% YOY, -0.1% MOM
And if they get it right the markets will shart the bed.

To the shart thread we go
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27 minutes ago, Cheeseweasel said:

Seems like the market reaction is MOM is ok, but we were hoping for more.

When you dig into the numbers CPI Ex-Food & energy = +.3%. Not great, Bob.

 

Yep.  Fuel being down during most of December to yearly lows certainly helped.  It’s already back up 15% since then.   

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Seems like the market reaction is MOM is ok, but we were hoping for more.
When you dig into the numbers CPI Ex-Food & energy = +.3%. Not great, Bob.
 

Why don’t people look at the MoM on an annualized basis so they can compare to the YoY? And why look at seasonalized numbers instead of unseasonalized? It feels like moving through unprecedented times for world economic change should reduce the value of seasonally adjusting actuals.

Todays print on an annualized and unseasonalized basis, just the index change itself, was -3.62%.
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1 hour ago, Cheeseweasel said:

Seems like the market reaction is MOM is ok, but we were hoping for more.

When you dig into the numbers CPI Ex-Food & energy = +.3%. Not great, Bob.

 

yeah but that's 3.6% on an annual basis.  drop just .1% and you're in target (2.4% annualized ex food and energy).  I take it as good news.  the chart will bounce up and down over the months, but it's certainly trending the correct direction. 

inflation.JPG

 

impatience is the problem now. I haven't done the math but we've had enough .1%-.4% months in a row that by the end of this year, we should be really close to target unless it gets fucked up with some kind of odd resurgence.  economy is holding steady except for tech layoffs thus far, maybe 2-3 .25% increases for good measure to avoid a resurgence, but I'm pretty happy with the trend line at this point.

I say end of the year, could be my mid-summer when we clear out the .6%, .8%, 1.2%, 1.0%, and 1.3% of January 2022 through June 2022.  As this chart shows, the high water mark the second half of the year was .4%. 

 

inflation2.jpeg

 

I think if a hard recession is avoided, the fed will ease rates slowly and settle in at a modest holding pattern, maybe lowering slightly.  If a hard recession happens later this year, 2024 will require more aggressive rate cuts.  wildcard the US government's cost of borrowing.

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8 minutes ago, troph said:

yeah but that's 3.6% on an annual basis.

3.6% on top of already high inflation.  If we were at 1%, I'd agree this wasn't an issue. At 10%, not so much.

And as pointed out earlier, the biggest drop this month was fuel which has already increased. 

Quote

impatience is the problem now.

I have plenty of patience. The FED on the other hand...

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1 minute ago, Cheeseweasel said:

3.6% on top of already high inflation.  If we were at 1%, I'd agree this wasn't an issue. At 10%, not so much.

And as pointed out earlier, the biggest drop this month was fuel which has already increased. 

 

I'm convinced that absolutely nothing would appease you in this thread.

+0.3% for the core was in line with expectations. The trend is solidly down. Inflation is coming in nicely while the possibility of a soft landing is still on the table a year into aggressive rate hikes. 

They started late, but at this point (it could change) the Fed is acing this test despite all of us thinking they wouldn't. 

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2 minutes ago, Cheeseweasel said:

3.6% on top of already high inflation.  If we were at 1%, I'd agree this wasn't an issue. At 10%, not so much.

And as pointed out earlier, the biggest drop this month was fuel which has already increased. 

I have plenty of patience. The FED on the other hand...

that's not how it works, it has to step down. there is a very clear difference between the first half of last year and the last half of this year. 

first half of the year annualized: 10.4%

rate increases started in March at .25% but didn't hit again until May at .5% and then the infamous .75% in succession from June through November.  Result?

second half of the year annualized: 1.8%

I actually think the fed has done a great job thus far, and this has kicked our asses as real estate developers and finishing up our own house and buying a mortgage.

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7 minutes ago, troph said:

I also think layoffs at this point are a good thing. this quiet quitting, don't give a fuck about working nonsense needs to stop.  people need to get back to enjoying work, understanding it's in our DNA and get off their fucking instagram accounts staring at reels saying "fuck your job" and "you only live once" while some idiot is simply posting a video to that crap while on a long weekend at the Cape.  fuck that noise. work is good, we were made to do it. now get grateful, work hard, do a good job or get fucked.

Ok boomer 

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5 minutes ago, Js1 said:

Ok boomer 

I'll be honest, I've put the sailboats, flyfishing pics and exotic destinations on mute (actually put the phone down mostly all together unless I have a trout or redfish to brag about).  it's a thing. Fuck SM and insta "fuck your responsibilities" memes.

Edited by troph
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Quote

...
Although inflation appears to be cooling at a fast pace, some analysts note that it still remains elevated. Paul Ashworth, chief North America economist at Capital Economics, said that although inflation is falling its not enough for the Federal Reserve to change directions on monetary policy.

“Overall, this latest report adds more weight to our view that CPI inflation will fall more rapidly than the Fed expects this year. But the Fed isn’t going to stop raising interest rates until it sees accompanying evidence of an easing in labour market conditions and wage growth. It will be a couple more months before that evidence is also irrefutable,” he said in a note.

https://www.kitco.com/news/2023-01-12/Gold-prices-push-above-1-900-as-annual-U-S-CPI-rises-6-5-in-December-in-line-with-expectations.html

Quote

The Federal Reserve should raise its benchmark interest rate slightly above 5% and then pause, said Philadelphia Fed President Patrick Harker, on Thursday.

“I expect that we will raise rates a few more times this year, though, to my mind, the days of us raising them 75 basis points at a time have surely passed. In my view, hikes of 25 basis points will be appropriate going forward,” Harker said in a speech to The Main Line Chamber of Commerce in suburban Philadelphia.

Harker said he thought the Fed should raise its rates slightly above 5% and then “we sit there.”

The Philadelphia Fed president is a voting member of the central bank’s interest-rate committee this year.
...

https://www.marketwatch.com/story/feds-harker-backs-pushing-interest-rates-slightly-above-5-and-then-pausing-11673534095

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27 minutes ago, troph said:

I also think layoffs at this point are a good thing. this quiet quitting, don't give a fuck about working nonsense needs to stop.  people need to get back to enjoying work, understanding it's in our DNA and get off their fucking instagram accounts staring at reels saying "fuck your job" and "you only live once" while some idiot is simply posting a video to that crap while on a long weekend at the Cape.  fuck that noise. work is good, we were made to do it. now get grateful, work hard, do a good job or get fucked.

giphy.gif

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21 minutes ago, troph said:

that's not how it works, it has to step down. there is a very clear difference between the first half of last year and the last half of this year. 

first half of the year annualized: 10.4%

rate increases started in March at .25% but didn't hit again until May at .5% and then the infamous .75% in succession from June through November.  Result?

second half of the year annualized: 1.8%

I actually think the fed has done a great job thus far, and this has kicked our asses as real estate developers and finishing up our own house and buying a mortgage.

I can show you a pretty cool way to artificially turn that higher rate mortgage into a lower one if you're interested.  

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37 minutes ago, troph said:

I also think layoffs at this point are a good thing. this quiet quitting, don't give a fuck about working nonsense needs to stop.  people need to get back to enjoying work, understanding it's in our DNA and get off their fucking instagram accounts staring at reels saying "fuck your job" and "you only live once" while some idiot is simply posting a video to that crap while on a long weekend at the Cape.  fuck that noise. work is good, we were made to do it. now get grateful, work hard, do a good job or get fucked.

You sure showed that cloud what's up. 

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9 minutes ago, Incredulity said:

Inflation Rises to 7.9 Percent for February 2022 - The New York Times

 

This is exactly the point of "higher for longer".  Fed has said repeatedly that they are focused on avoiding the ups and downs of the late 70's early 80's.

 

I think that's a good thing at this point.

As a saver, it's nice to be able to grab some risk-free yield as well.

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13 minutes ago, Incredulity said:

Inflation Rises to 7.9 Percent for February 2022 - The New York Times

 

This is exactly the point of "higher for longer".  Fed has said repeatedly that they are focused on avoiding the ups and downs of the late 70's early 80's.

 

that was what my vague reference was referring to.  but @bernorange's post from some economist or journalist essentially laid out what I personally stated.  rates have to go up further, but I bet we don't exceed 1% total and it's mostly .25% to avoid the resurgence.  I think in 6 months we will know if the first gauntlet is over, then we are in a wait and see for 12-24 months.  I think rapid rate decreases are the big concern imo for a resurgence. 

supply chains and global politics are making the crystal ball difficult.  The free world is reacting to Russia and China COVID problems in a lot of ways, but no more stark than Canada, US and Mexico talking about moving manufacturing to North America and being less reliant on China.  Add the supply chain disruptions, climate change policy (policies governments are enacting are a fact no politics intended), and it's really not certain what happens in the next 24 months re supply chain and inflation.  It is clear (to me) that as sticky and non-transitory as inflation proved to be, it was born out of supply chain disruptions.  so until the the supply chain policies and changes really settle in, we don't know what will happen.  that's my hot take.

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24 minutes ago, Trey3216 said:

I can show you a pretty cool way to artificially turn that higher rate mortgage into a lower one if you're interested.  

do tell.  our primary response was to borrow less, we are paying down a third of the mortgage with cash and pay remaining budget overages with cash too.  that hurts like a MF but long term we want no mortgage in 15 years so it has to be paid down sometime....

Edited by troph
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18 minutes ago, Royalfan5 said:

You sure showed that cloud what's up. 

well, we have more people working for us out of the Philippines now than we have employees in the US.  it's 3:1 so it's not an army but it's something.  they are grateful, do good work, cost less and show up ready to do the job.  if that's yelling at a cloud ok.

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2 minutes ago, troph said:

well, we have more people working for us out of the Philippines now than we have employees in the US.  it's 3:1 so it's not an army but it's something.  they are grateful, do good work, cost less and show up ready to do the job.  if that's yelling at a cloud ok.

"People don't want to work anymore!"

Unemployment is 3.5%

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I also think layoffs at this point are a good thing. this quiet quitting, don't give a fuck about working nonsense needs to stop.  people need to get back to enjoying work, understanding it's in our DNA and get off their fucking instagram accounts staring at reels saying "fuck your job" and "you only live once" while some idiot is simply posting a video to that crap while on a long weekend at the Cape.  fuck that noise. work is good, we were made to do it. now get grateful, work hard, do a good job or get fucked.

Not really the thread for the wider discussion, but do you not see the irony in posting this on a college football message board at 9-something am on a Thursday?
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12 minutes ago, FirstTimeCaller said:

"People don't want to work anymore!"

Unemployment is 3.5%

I don't know how much you work with folks across markets and industries but I'd be willing to bet my experience is a more broad representation of the entire market than yours (off the top of my head I deal with real estate, contractors, subcontractors, attorneys, corporate fortune 500, board of directors, C-suite for mid sized companies, hospitality, theatre/performance, social work, marketing, bankers, etc.). it's not that people don't want a job, they do, but since the pandemic it's pretty clear the amount of just getting by has skyrocketed. folks are unreliable, checked out, and I experience repeatedly and daily across several industries.  I do think whitecollar and the higher up you go the better it is but even some of my corporate clients are having trouble with people.  so you can argue all you want, I'm not here for that, I'm here for real and thoughtful discussion.

Edited by troph
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5 minutes ago, troph said:

I don't know how much you work with folks across markets and industries but I'd be willing to bet my experience is a more broad representation of the entire market than yours (off the top of my head I deal with real estate, contractors, subcontractors, attorneys, corporate fortune 500, board of directors, C-suite for mid sized companies, hospitality, theatre/performance, social work, marketing, bankers, etc.). it's not that people don't want a job, they do, but since the pandemic it's pretty clear the amount of just getting by has skyrocketed. folks are unreliable, checked out, and I experience repeatedly and daily across several industries.  I do think whitecollar and the higher up you go the better it is but even some of my corporate clients are having trouble with people.  so you can argue all you want, I'm not here for that, I'm here for real and thoughtful discussion.

I'll just note where I work, we continue to have support staff and goods cut back, and more things added to everyones plate, then management is baffled the they've lost 20% of the company in a year despite paying very well. 

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8 minutes ago, gmr548 said:


Not really the thread for the wider discussion, but do you not see the irony in posting this on a college football message board at 9-something am on a Thursday?

Or talking about how you hire three people in the Philippines because they "cost less."

I'm sure that there are a lot more people checked out since the pandemic. But I think that's also because people are seeing they have gotten the short end of the stick for a while now. 

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4 minutes ago, FirstTimeCaller said:

Or talking about how you hire three people in the Philippines because they "cost less."

I'm sure that there are a lot more people checked out since the pandemic. But I think that's also because people are seeing they have gotten the short end of the stick for a while now. 

because they do the work reliably without complaining.  There is nothing morally wrong with hiring humans and paying them good wages.  The bible doesn't say thou shalt only hire people in your country.  and I'm not an employee, I work for myself so the work gets done or it doesn't.  but let's argue about bullshit.

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13 minutes ago, troph said:

folks are unreliable, checked out, and I experience repeatedly and daily across several industries.

Dealing with the chaos of the last 3 years has many people I interact with compartmentalizing things. 

When you can't rely on anything actually occuring up or down the food chain the give a fucks start being hard to find.

Edited by Incredulity
spell bad
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7 minutes ago, Incredulity said:

Dealing with the chaos of the last 3 years has many people I interact with compartmentalizing things. 

When you can't rely on anything actually occuring up or down the food chain the give a fucks start being hard to find.

100% agreed.  I don't fault people. I dealt with it myself. I don't know when was the last time we as a human race faced a unitary/singular trauma event, but that's what's going on.  I hated my gig for about 9-12 months when the pandemic restrictions started to lift. Burnt out beyond recognition.  the only thing that got me out of it was choosing to being grateful, fishing a lot, and a ton of talk therapy.  we all have to figure it out, and it sucks big time.

I think we need time and stability to overcome it. I think tighter economics will make everyone more grateful, it has for me.  2022 suuuuuuuucked hard, second only to 2010 for the worst financial year I've experienced.  But that snapped me back to gratefulness.  I also think we need bad shit to stop happening.  not sure we are going to get that, but we need calm seas for a few years please. pretty please.

and I think all of this impacts supply chain, labor and inflation. it's all interrelated.

Edited by troph
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57 minutes ago, Incredulity said:

Inflation Rises to 7.9 Percent for February 2022 - The New York Times

 

This is exactly the point of "higher for longer".  Fed has said repeatedly that they are focused on avoiding the ups and downs of the late 70's early 80's.

 

Why use a chart from 11 months ago? An updated one would show that line peaking later in the year and then starting a steady downslope a few months ago.

Edited by Storm the Field
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2 minutes ago, Storm the Field said:

Why use a chart from 11 months ago? An updated one would show that line peaking later in the year and then starting a steady downslope a few months ago.

I think he was really only trying to show the 70s/80s resurgence graph and it was an excellent point.  I don't think the point was current and far right of that graph, but the past far left of that graph (irony not intended).

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