This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
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Inflation Runs Rampant Only In The Imagination of Investors
The S&P 500 finished the day lower by about 70 bps, off the lows, when it was down about 1%. Nothing earth shaking but enough to get everyone talking about how rising rates are going to kill the market, and inflation once again is rearing its ugly head. So just how much inflation is there? I can think of one commodity that is going up, and that is apparent Oil. Which, I have shown you time and time again, how it tight the correlation with the CPI and PPI is.
Yes, No, Maybe So?
Some critical industrial metals like copper, have gone nowhere over the past year. To, to be honest, the chart doesn’t look so hot and looks like it may be heading lower. Not so good for Freeport (FCX)
Iron ore is a critical ingreident in steel. Again, not so inflationary, either. But that setup looks nice, for a rise at some point, if the dollar doesn’t get too strong. Maybe a positive for Vale, Rio, and BHP.
Then off course there is gold.
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Must be coffee? That has to be a good sign for SBUX, right?
What about Sugar? Definetly not.
Orange Juice? Oh there is a little bit, is Orange Juice to blame for the rapid inflation? Does Coca-Cola (KO) still own Tropicana?
Lumber now that is going up. Not good for the homebuilders like PHM.
Cotton has a little bit of inflation. Yeah not so good for Haines, (HBI)
Of course, there is the PCE which is at 2.6 percent! Strange thing here, is that it hasn’t change since the first quarter of 2016.
Hourly wages haven’t accerlated since 2016!
Even housing costs have remained relatively stable.
I mean do any of these charts speak of rampant inflationary forces taking place in the economy? No, and in some cases, things are getting cheaper! Maybe, I need to do that thing; you know where you remove the scale, and then zoom all the way in and get real close, to make a ten bps rise look monstrous. But, no. That is no what we aim to do here.
So when you find some inflation someone please let me know!
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Tags: #sp500 #oil #inflation #yields #copper #ironore #steel #sugar #coffee