Friday, April 09, 2010
It Hurt So Good We Just Have To Go Back For More
1)This FT article about oil and commodity prices:
This week oil climbed to $87 a barrel, its highest level since October 2008 and prompted concerns that triple-digit crude was once again in the offing.So higher prices create higher prices? What could possibly go wrong? It's a sure thing!
Nicholas Colas, ConvergEx Group chief market strategist, says: “With crude oil prices marching steadily higher, portfolio exposure to the energy sector could well become a key determinant of overall investment performance through the balance of 2010.”
Hmm, a raven just flew by and croaked a few words about the economy taking a dive in October 2008, but I am sure
In part the rise in oil prices appears to be due to Chinese buying. They keep building new oil storage capacity and filling it. ChinaOilWeb.
2) I mentioned Walmart's move to cut their low, low, low prices even further before, but here's another article, complete with a really nice graph of same-store sales changes:
The bad economy has forced Walmart to become more and more dependent on its sales of minor household items, pharmaceuticals and groceries. Walmart is having trouble beating the grocery competition in many markets, so it cut its brand stocking, is going to cut its prices, and is going to try to make some of that back by squeezing more out of the companies supplying the brands. Throughout the 2007-2009 period, Walmart has been steadily increasing its net margins on a lot of this stuff once its bid to go higher end on items like clothing failed:
J.P. Morgan analyst Charles Grom wrote this week that his early scouting suggested a more concerted effort by Wal-Mart to convey the image of lower prices, but that he was left wondering how sharp reductions really were.Uh-huh. Here's to Chuck - he's got enough sense to get out of the echo chamber and go find what items really cost. But he's also picking up the residual inflation from the oil increases. Groceries are raising prices too, but on the whole quite a few chains in competitive areas deliver lower overall costs, and the quality of some items is better.
His regular price survey of 31 items at the chain found that the total bill was up 2.3% from the previous month.
The final data point is Europe's mad scramble to hide the Greek bond losses. The first attempt - in which institutional investors with an incentive to shore up their own balance sheets doubled down and bought the last bond issue - has failed. Rather dramatically. So the next attempt has to be a very low interest loan. In reality, Greece is going to default one way or another. Either the bondholders in effect write down their debt by buying new bonds or extending new loans (a whole lot of them) at rates way below market value, or Greece just defaults.
Greece is in fact in the driver's seat on this one, as unpleasant a truth as that is. The reason is Italy. The Eurozone can withstand anything that Greece does without a hiccup, but Italy is only about two years behind Greece. And Italy is big. So now Europe is slowly marching into Japanese territory, and that means much lower future growth.
As to the gizmo, after reading the last few days' news, yesterday I decided to shift course and make the gizmo a full-featured (if crude and rude) db application covering the entire Consumer Expenditure Survey database. I think it is time for some perspective on the very important issue of what the US consumer economy can bear in the form of new taxes and costs.
I will have that done in a few days. I am not sure whether it can work on this blog or whether I have to set up a new website for it, but that wouldn't take long to set up a website.
I really need that data to answer some of the questions that readers have recently asked. And I could just write the conclusions out here, but I have developed a strong allergy to that sort of thing, We are suffering from mass delusions caused largely by a few ingroups that are controlling public discussion due to feeble reporting, and the only cure for that ailment is to create easy ways for the average person to parity check what is said in the media.
I don't want to form your opinions. I don't want to broker your political, economic or social views, unless your personal views are based on factual fallacies - in which case, I would like to correct your facts and then let you run free. I want to enable you to form your own opinions based on both facts and data and your own inherent perspectives. The US has a hard economic - and thus social and political - adaptation ahead of us, and almost all the interests that should have been trying to plan for it have instead been trying to fool people into thinking that we don't.
We need new paradigms, and what the heck? Why not try democracy? It may sound insane, but it has worked well for us historically. If average people have some information, they'll figure out the best way forward for us all. It won't be dignified, and it won't make anyone terribly happy, but it will WORK. It will function. That's what we need now. Our enthrallment by our own fantasies are what is sapping our national vitality.
It must be obvious to most thinking people in a very broad set of social spectra that those who should have been making the necessary decisions haven't been. In a democracy, that means that the decision-making power has to shift down to a broader section of the population through the mechanisms of representative government. In other words, you're up at bat. I don't want to change your batting style - I just want to give you a stronger bat and a good solid footing from which to swing.
"So higher prices create higher prices? What could possibly go wrong? It's a sure thing!"
Hahaha! Love the sarcasm. Love the sure things!
World Production Euphoria
H.8 other deposits SA are still rising, but barely rising. We're very close to hitting the wall. Since December we have added less than 50 billion.
One of the reasons the housing bust has hurt us so is the generally higher pay that so many were receiving. The jobs that have been added from the pits so far are rather ill-paying (except for Census).
I cannot get over the government jobs in the March employment report. They didn't put the Census jobs in the SA portion, but they did show up in the final numbers. And the final numbers showed losses. I fear we are almost at the point at which the income contraction kicks us down, and the very marginal price increases flowing through at the stores from what should be significantly higher costs shows that the stores don't see any pricing power.
These state and local jobs that are apparently going belly-up are on the whole much higher-paying with better benefits. We are so close to deflation that my eyeballs are bulging from the tension.
Coffee blew out in March. That's the reason that Walmart is trying to stress it.
Look at Table A-8. You see the rise in part time jobs there, and you see the drop in slack work (mfrg picks up).
But now there's nothing left except the absolute economic potential. The stimulus fades, the Census jobs will start fading in the summer sometime, there's not much in retail, there isn't much left in mfrg, and the government jobs are apparently crashing.
"Just a month ago, according to AAA Chicago, unleaded regular averaged $2.86 a gallon in the Chicago area.
Last week, it was $3.02.
Now, it's $3.08 and many predict it's heading higher; much higher.
Daniel Flynn, energy trader at PFG Best Research, was asked just how high the gas prices might go.
"That's the good question," said Flynn. "I've heard as high as $4 a gallon. Some analysts are saying $4."
What's going on? Reports that the economy is heating up – with growing consumer spending, higher retail sales and higher auto sales – has speculators betting on higher energy prices, too.
When the economy grows, so does demand for oil. But pushing energy prices too high could backfire."
Yep! Read the whole thing here:
This site is very helpful for work from home.
work from home
Real Estate vs. Wages
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