Posted on 10/26/2021 2:46:03 PM PDT by RomanSoldier19
He hardly qualifies as a member of the Great Resignation movement, but Martin Barnes will be retiring as chief economist at BCA Research at the end of the month. After nearly a half-century toiling in the dismal science, including the past 34 at BCA, he marvels at others who are years and even decades his senior, and, “with more money than God,” still eagerly keep at it.
Before Barnes heads home to Scotland to be closer to his children and grandchildren, we sought his perspective on the current investing scene, a perspective gleaned by living history, rather than reading about it. A long-term view is sorely lacking among many younger investment watchers, given that anyone who has been in the markets since the 2007-09 financial crisis has learned that it’s always best to be fully invested, he observes in a telephone chat before departing Canada, BCA’s home base.
Barnes’ career has been bookended by wrenching crises—the oil price shock of 1973 and now the Covid-19 pandemic. He cautions about drawing too-close comparisons with past episodes, however. “At any given point, you can find five or six similarities, but also 27 differences,” he adds, dismissing analogies to the 1920s after World War I and the flu pandemic.
(Excerpt) Read more at barrons.com ...
Be prepared, FReepers.
The big difference so far is interest rates. That will change.
There is also a saying where history does not always repeat itself but rhymes.
Cue 70s adult movie music.
Changing interest rates might make the stag part of stagflation worse, at least for the short term. Less growth. Inflation is only (in loose terms) 1/4 due to interest rates. 1/2 is too many buyers seeking too few goods. The last 1/4 is cost of transport. I expect huge input cost (producer price) increases through 2022 if supply issues don’t work out - and generally they won’t anytime soon.
Cue 70s adult movie music.
—
Who’s the cat that won’t cop out when there’s danger all about? (Shaft)
Right on
You see this cat Shaft is a bad mother (Shut your mouth)
But I’m talkin’ about Shaft (Then we can dig it)
He’s a complicated man but no one understands him but his woman (John Shaft)
https://www.investopedia.com/articles/05/012005.asp
In other words, to counter the current demand side inflation we are facing, the Government would need to do everything exactly opposite of what they are doing.
So what do you suppose the chances of that happening are?
There was no China in the 70’s to compete with the US via a economy. That is huge. Throw in the amount of debt today the R’s and D’s have run up. That makes things even more difficult.
Back then I was working in a factory. All over were machine shops and the like providing good blue-collar jobs for those with a high school education when that education was worth something. Lots of small businesses catering to the workers and their families.
All that is going, going, gone.
No sign of a slow down yet in my area of Northeast Florida. Boom times are here and my suburban neighbors are partying like it’s 1929.
Yes, they are doing it all wrong.
There is another factor few have considered. With China being the main supplier for so many manufacturing inputs, personally I think they are on a low-grade economic war with the west. For example, they basically control all the aluminum manufacturing because they control the supply of magnesium. Car manufacturers are nearly 100% reliant on them playing nice. It’s not just China but China also dominates demand for ships and containers that impacts other places out east that want to export here e.g. India, Indonesia, etc.
Shipping out of Asia to North America is expected to climb even higher next year. Don’t forget the Chinese New Year (Lunar) will shut them down for about 3 weeks late Jan/early Feb. Production (supply) will dissipate and then play catch up into the spring. So I wouldn’t expect supply to get competitive next year - it’s a sellers market for the foreseeable future.
What will it cost to send a container across the ocean? If you pack it with $1000 iPhones it probably doesn’t matter too much the cost of a container, plenty of profit to absorb the freight. If you pack it with a basic commodity, you’re looking at a huge increase since shipping costs are now a major factor in delivering them. Something that cost 50 cents a pound 2 years ago will triple at these rates. That is why these big consumer goods companies can’t even begin to figure out what they will need to charge next year - they have no clue what their costs will be and suppliers are in no position to give blanket year-long pricing either. Everything will be spot market priced based on supply and demand.
“Back then I was working in a factory.”
Back then I was on a all-expense paid cruise to Haiphong. Unfortunately, shore excursions were canceled.
S&P 500
4,574.79
+8.31(+0.18%)
Dow 30
35,756.88
+15.73(+0.04%)
Nasdaq
15,235.71
+9.01(+0.06%)
Whew hew...markets on a roll.
Uh...till they’re not. Folks, keep your eyes pealed.
The stage is being set and there is about to be a transfer of wealth.
40’ shipping container (toys)
$6500 2020
$30,000 2021.
Many small business cannot pass those costs along. People will not pay the increase.
Yes for toys and other cheap end user products, prices will soar and demand will fall.
For consumer goods from P&G and KMB etc, they have to import thousands of metric tons of input materials to make their pulp, shampoo, make-up cosmetics etc. There is not a lot of margin on those items to begin with from the suppliers/manufacturers. And it’s not like people are going to stop buying cosmetics and toilet paper (recession proof, at least in the textbooks though people will trade down from premium brands to save). Foods, textiles, automotive all also use these same basic materials, or materials sourced from the same basic materials e.g. palm oil, glycerin etc.
Oh yes, I remember those interest rates under Carter.
What is happening now is going to make the 70’s look like a cake walk. And at least the bankers had to pay to borrow people’s money back then.
“Is Stagflation Coming Back? Economist Sees Parallels With the 1970s—and Big Differences.”
New Jimmy Carter II: now with more dementia ...
It is impossible to portray Red China as the enemy when the West built and continues to fund them; they are the factory of the West, staffed by slaves with no individual rights. We are pivoting to other Third World factories in Asia now, but still continue to keep Red China in business - while they threaten the others we have re-directed work towards.
In the 1970s it was accepted by American politicians that Red China (even after recognition) was directly at odds with our values; now our politicians seek to replicate their operating model here.
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