“Terminals filled with containers are being used as storage because of the lack of warehouse space, and carriers need to have the ability to charge these fees, Maffei said, but they must be charged in a reasonable way that incentivizes movement.”
If inventories are that high, then there’s going to be a reckoning. Retailers will need to start discounting merchandise to move it. Cathy Wood might be correct that inflation could quickly unwind. Target was the first retailer to callout high inventory levels in an earnings call.
In April, wholesale inventories were up 24% yr/yr. That completely goes against the narrative of supply chain shortages. I think businesses over ordered thinking the covid fueled growth would continue. Once they realize sales aren’t growing at 24% yr/yr, then they’ll have way too much inventory leading to discounting.
This is all with China shipping us less due to their covid lockdowns. What’s going to happen once they are shipping normal volumes?
At one point, supply chain issues caused prices to increase. We should be past those issues (there might be a few outliers). It’s pretty difficult to claim supply chain issues when inventories are increasing. That means the supply chain is producing goods faster than they are being sold to end customers. Maybe there are some very specific shortages, but there’s no way it’s a broad issue now. Now it’s a staring contest to see who will blink first and lower prices. Target has already said they will start. They are big enough that it’ll force others to follow.
Air travel isn’t a necessity, so people will quickly but back as they have less money to spend. Only about 5% of people buy a new car in a given year. It’s actually less, since those sales include light duty vehicles for business purposes. Oil/gas and food are really the big ones. I don’t see how we get oil/gas prices better, since those aren’t quick fixes. Refineries are at 94% capacity, and we haven’t built a new one in this country in decades. The only thing that’ll help is demand destruction.
I think US demand is most important due to refining capacity limitations. We don’t transport refined oil. Reduction of global crude demand would help too.
Some countries printed massive amounts of money in response to COVID, some didn’t and some are just perpetual basket cases - emerging markets always emerging but never emerged. It’s pretty easy to see who’s who on that list.
“I’m an independent woman. I’m on my own with no help,” said Schlafer, whose office door is adorned with red lettering reading “Boss Lady” and anti-vaccination manifestos posted on the window.
She’s “fed up” with the expletive-laden hate calls from strangers and the blaring headlines in the media.
Schlafer knows that her business model is increasingly putting her at odds with the town’s other 800 residents. But she said she is going to march forward with high prices and a thick skin to fend off criticism.
“I’ve been called a lot of different things,” said Schlafer. “It hasn’t changed me one iota.”
The problem with some rural gas stations is they have small tanks - in some cases only 6000 gallons. The delivery costs are now killing them. We used to have two stations in Pine. Now we only have one. The other in waiting on a permit for a larger storage tank. In the mean time they’re not even bothering to try and sell gas.
The theory is, to kill inflation fed rate has to be higher than inflation rate.
CPI is now 8.6%, how come fed rate is only 1.50%-1.75%? Shouldn’t it be 9-10%?
Could it be because USG debt is $30T? 10% of $30T = $3T.
In 2021, USG collected $4.05T
In 2022, USG expect to collect ~$5T
So can’t raise fed rate too high i.e. can’t pull a Paul Volcker.
Will QT work? $2T enough? How about $5T?
I don’t think there is any principle that says the fed rate has to be higher than the inflation rate to have an impact. People have too much money thanks to stimulus, stock market, hot labor market, housing market, wealth effect, crypto etc. At the same time, it’s hard to fix the chip shortage when we have no manufacturing in this country anymore and everyone feels entitled to work from a condo on the beach.
Need to kill that wealth effect s**t and put some pressure on the labor market so that butts are back in chairs and we can get the supply situation figured out.
Don’t forget all the state and local government debt. If bonds mature and have to be refinanced, it’s going to blow up their budgets.
The supply shortages are over stated. I posted the inventory data. There are some very specific shortages, but many items have excessive inventory. That’ll force discounting which will make inflation go lower. Lumber has dropped 10% in the last 6 weeks at Lowe’s. I’m going off the price of 2x8x16 pressure treated lumber that I’m using to build a deck.
I saw the Target stuff, which is interesting, but there are still clearly some major shortages. We had to order a new bumper for one of our cars and it has taken two months to arrive. I spoke to a woman at the bodyshop who had waited six months for parts to repair her car (and not something exotic – a Honda civic). So it is certainly not everything, but there are clearly still issues with key components that have been going on for well over a year now. And since no one wants to make things in this country anymore we are the mercy of the global supply chain.
This points to the issue being people spending like drunken sailors. We are importing and exporting more than we were pre-pandemic. Inventories are also on the rise, so maybe the “shortage” is the transportation from port to shelves. Retailers are screwed if sales don’t materialized, because they’ll be sitting on TONS of inventory.
