Inflation is ramping up and fresh inventory surveys prove it.
New survey data on manufacturers in Europe and the U.S. showed tight inventories in semiconductors, steel, lumber, and cotton, together with record backlogs and higher input prices.
Oil inventories are getting tight too…falling by as much as 7.7 million barrels with oil jumping to $66 a barrel. Copper, meanwhile, is back above $10,000, amid continued concerns over supply.
And it will likely get worse.
Companies are scrambling at a record pace to replenish their stockpiles to keep up with ever-accelerating consumer demand, bidding up the prices of raw materials in the process. Therefore, prices of commodities such as corn, iron ore, lumber, and oil are increasing.
Warren Buffet admitted it over the weekend, saying his company was seeing “very substantial inflation” and prices were going, “up, up, up.”
UP and Away!
Indeed, the Bloomberg Commodity Spot Index, which tracks prices for 23 raw materials, reached its highest level since 2011. The index increased by 70% since reaching a four-year low in March 2020!
Could it be…could it JUST BE…that this rising demand MIGHT be the result of the Fed’s easy money printing finally reaching the consumer? (With, of course, a little help from the Fed’s friends in the White House courtesy of those Biden stimulus checks, and promises of trillions in social programs?)
You better believe it is.
All the evidence points to the fact that this jump in prices is not “transitory” nor related entirely, solely to just particular supply issues.
Higher prices are here to stay, and the consumer will be on the hook.
Markets rebound as Yellen “clarifies” her remarks
And still, despite soaring inflation, the market won’t tolerate even a hint at tapering. This was made evident, again, as Treasury Secretary Jannet Yellen suggested that interest rates may “have to rise somewhat” to prevent overheating the economy.
Stocks promptly took a nose-dive (tech leading the way) and Yellen had to walk her statements back, saying that she was neither “forecasting or recommending” a rate hike.
But, you know how touchy investors can be.
Yellen also emphasized the need for an independent Fed, effectively trying to remind panicked investors that she is no longer the Fed chairman.
As a result of Yellen’s “clarification”, markets are rebounding from yesterday’s slump.
BUT, let me ask: What sort of recovery is this if the markets are still dependent on zero-percent interests forever?
Tech Stocks Rebound, But for How Long?
Tech stocks were leading the way in the recovery, but they were also hit hardest during Monday’s slump. These stocks were favored by the markets during the coronavirus pandemic, as people were spending more time at home.
Now that the recovery is supposedly underway, a correction might be in order. As vaccines are rolling out, investors are again turning to the transportation sector as well as to value stocks.
Dogecoin Continues Soaring
Not to be outdone by this week’s spectacular rise of Ether (still over $3000), Dogecoin is making headlines again on Elon Musk’s Saturday Night Live performance.
The meme crypto jumped to $0.65, approaching the $1 benchmark. Dogecoin has jumped 11,000% in 2021.
Clearly, it’s no joke.