Equity investors should pay close attention to not only the stock market but also the credit markets (debt securities) and the currency markets as both the credit and currency markets trump the size of the equity markets. When the credit and currency markets are not confirming the message of the equity market you better listen up. I believe we are at another inflection point and investors need to do just that, “listen” to the markets and act accordingly.
The effects of inflation aren't just a matter of increasing prices...
A holistic look at four interrelated motivations the United States government has for destroying the value of the dollar.
An old saying goes, “Lots of ways to skin a cat.” Given the rise in Agri-Food prices over the past about four years that may be a skill that becomes rediscovered in the years ahead. While growing up near St. Louis one of the more interesting experiences was a visit to the now long shut downtown open air farmers’ market.
To give the BLS some credit, they must try and estimate a single rate of inflation that applies to everyone equally. But that is a completely impossible task. An octogenarian living in Seattle on a meager pension and taking lots of prescription medications will have a totally different inflation experience than an 18 year old living in their parent's basement eating Ramen noodles.
Last Monday OPEC revised its world oil demand growth upwards given the pace of global economic recovery. “Given the latest upward revision in world GDP, world oil demand growth is forecast at 1.23 bpd averaging 87.3 million bpd in 2011, 50,000 higher than last month’s estimate. … The magnitude and the speed of the world economic recovery will have a remarkable impact on world oil demand this year
From the beginning of 2007 to July 2008, oil prices began a triple-digit trek. In that time period, alternative energy soared, but mainly in two segments: solar and uranium. Wind turbine companies like Vestas Wind Systems performed, but it was First Solar (FSLR) that rose from $28/share to more than $280/share.
Platts last week that China's crude oil demand reached record levels in December, rising 18% year over year to a record 9.6 million barrels per day (b/d) average. Oil demand in December was up 7% from November's the previous record high – so it appears demand continues to ramp upward in a significant manner. The continued increase in demand has been labeled as ‘astounding’ by industry analysts.
A 10% rise in food prices in a household that spends 10% on food (a typical upper-middle class U.S. household) results in a "statistical noise" 1% increase in the family budget. In a family budget with 40% devoted to food, a 10% increase in food meaningfully crimps household spending. A doubling of food prices would be catastrophic.