** 08-Dec-2021 World View: Friday's CPI report
vincecate wrote: Wed Dec 08, 2021 12:00 am
> "Traders of derivatives-like instruments known as “fixings” are
> betting that the headline, year-over-year CPI reading for November
> will rise by 6.9%, which would be the highest inflation level in
> almost four decades. That’s a bit above the 6.7% median estimate
> of economists polled by the Wall Street Journal."
>
https://www.marketwatch.com/story/trade ... 1638625318
richard5za wrote: Wed Dec 08, 2021 3:06 am
> The lack of concern by the market which roared up again yesterday
> is something I am not understanding at all. It makes me think that
> I must have misunderstood or missed something. How can everyone
> not see the obvious trigger to a market bear?
The lack of concern in the market is that investors, like me, do not
believe the hysterical claims of hyperinflationary cpi, matching the
levels of the 1970s, that the so-called experts in the media keep
claiming. The historical examples of high inflation (Weimar,
Zimbabwe, Venezuela, America 1970s) all occurred during generational
Awakening-
Unraveling eras, when people are willing to go into debt and
spend recklessly. America today is in a generational Crisis debt,
when people are already loaded with debt, and avoid further debt, and
spend cautiously.
How was that figure of 6.9% arrived at? I guess it's possible, though
it's certainly a lot higher than I expect. Did the "experts" actually
do some analysis that leads to that figure, or did they just make a
knee-jerk forecast based on their fading memories of the 1970s?
The core reason for inflation this year has been scarcity of popular
consumer products, and that was caused by supply chain issues
following the pandemic lockdowns and paying people not to work.
But I've been hearing news reports that the supply chain backups have
been easing significantly. There are only 20 ships waiting offshore
in California, while there were 89 ships a couple of months ago. The
number of containers onshore that haven't been picked up by truckers
has been reduced. And the payments to people not to work have been
ending.
As I'm typing this, I'm hearing a report that oil crude prices are
falling, where analysts had been predicting they'd rise.
As I'm typing this, another report says that hotels are having to pay
higher wages to get back workers who were laid off during the
pandemic.
The so-called "experts" keep making the same mistake. They keep
saying that "those high prices will never come back down." Whether
that's true or not is irrelevant to the cpi. Last month's rate was
6.3%. If those high prices merely remain the same, that's 0%
inflation. In order to achieve 6.9%, then you'd have to have 200
ships waiting offshore in California, or you'd have to have some other
problem. Maybe there's something I haven't heard of, but I'm not
aware of something big enough to cause inflation to explode higher.
In the "Societal Collapse" thread, tankbuilder and FullMoon pointed
out a story on a shortage of nitrogen fertilizer that affect crop and
food prices next year.
https://www.producer.com/crops/nitrogen ... worldwide/
Whether or not the nitrogen fertilizer shortage will affect food
prices is uncertain, but even if it does, it won't affect the cpi for
many months to come.
So my point is that investors are not reacting to the predictions of
very high inflation because investors do not believe those
predictions.
In fact, you have predictions all over the map. I cannot recall a
time when there was so much confusion. And with the rise of the
omicron variant, the confusion is turning to desperation, as
government officials try to figure out how to prevent the spread of
covid, and have no clue how to do it. Different countries and
different states have different rules regarding vaccinations,
mandates, masking, isolation, quarantines and lockdowns. It's
impossible to take a vacation without having to go crazy trying to
figure out what the rules will be wherever you're going and how you
get there.
Vince points out that there are lots of "momentum traders" who have no
clue what's going on in the stock market and will sell as soon as it
starts to go down. Others are saying that "you cannot time the market
An announcement just now from Pfizer: three doses of their vaccine
neutralizes the omicron variant, and they're working on an
omicron-specific vaccine. That just adds to the confusion and
desperation, since government officials have no idea how it changes
their policies.
I don't really believe that "experts" trying to predict the cpi have
any reason but their "feelings." So we'll see on Friday whether
they're right, and the cpi reaches 6.9%.
