Inflation

[jazz]

errol, I think food and energy inflation are cooked in now. Just the crop problems and the ESG crowd in oil will assure that. That means a multi yr cycle before those shortages can be alleviated. The world is facing a 11mmbd production shortfall within a yr. and contrary to what chuck says, oil is in everything and will be for a long time. Thats inflationary.

How does a crop like canola get resupplied to surpluses now after 3 bad yrs. Going to take a while on that one.

And how do you tell someone who got a take out job for $12 an hr that they now have to take $11.

[errolanderson]

errol, I think food and energy inflation are cooked in now. Just the crop problems and the ESG crowd in oil will assure that. That means a multi yr cycle before those shortages can be alleviated. The world is facing a 11mmbd production shortfall within a yr. and contrary to what chuck says, oil is in everything and will be for a long time. Thats inflationary.

How does a crop like canola get resupplied to surpluses now after 3 bad yrs. Going to take a while on that one.

And how do you tell someone who got a take out job for $12 an hr that they now have to take $11.

jazz . . . an opinion, but Canada is going to lose global market share in the veg oil market this coming year. If canola production is just 16 million MT, something has to give as overall global veg oil supplies are on the rise. Do believe Australia and Ukraine will pick up some of the slack. Soyoil prices are high and break toward 50 cents/lb is quite possible in the new crop year. Palm oil has already shown cracks.

Canola will command a premium to a point, then demand destruction . . . .

As far as wages, as long as inflation in-tack, wages are steady / higher. But if the stock market blows a tire, this will be a game changer. Insolvent companies or Zombies may be forced to cut wages again (IMO). Real life economics, not gov't and central bank protected.

Inflation peaked in May (IMO) . . . fallout just beginning. I'm being opinionated, my apologies.

[Austrian Economics]

A falling interest rate environment is profoundly deflationary. There are going to be spikes along the way, but the overall trend for commodity prices is down.

We may have already turned the corner on the latest peak.

The only thing that will trigger another run-up is for interest rates to turn negative. This will happen eventually, perhaps sooner that we think.

[errolanderson]

The recent sustained plunge in U.S. bond yields is a surprise to inflationists. This suggests the market anticipates a cooldown in prices.

It pays to shop around as retail prices have already begun to drop in some categories. Apparently, the overheated used vehicle market is now in a price downswing. But Covid related price gouging is also still active.