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Inflation Runs Rampant Only In The Imagination of Investors
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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?
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Copper
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)
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Iron Ore
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.
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Gold
Then off course there is gold.
Coffee
Must be coffee? That has to be a good sign for SBUX, right?
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Sugar
What about Sugar? Definetly not.
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OJ
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
Lumber now that is going up. Not good for the homebuilders like PHM.
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Cotton
Cotton has a little bit of inflation. Yeah not so good for Haines, (HBI)
PCE
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.
Wages
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!
Night!
Mike
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Tags: #sp500 #oil #inflation #yields #copper #ironore #steel #sugar #coffee
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