I’m simply another lucky man who works for a limited liability firm (link to techloyce.com). Despite the fact that all other aviation companies are failing, the FAA has stated that we must remain open for life flights. This would be bad if I didn’t get a job because my family is remaining at home and I’m paying their bills. Unfortunately, my brother is a slacker who would refuse to work even if the covid19 situation didn’t exist.
conservativeprof
2 years ago
The most substantial threat of long-term inflation is labor costs. Labor costs have only marginally influenced inflation results so far. Consider that retail and restaurants (and perhaps more industries) have been confronted with sharply increased labor costs. I have seen restaurants advertising at $20/hour this summer. The same restaurants were paying $10/hour a year ago. The labor shortage seems due to increased government benefits (paid not to work) and permanent housing shortage with much higher housing costs. Over the coming 6 to 12 months, every industry will face demands for much higher compensation. For example, CNAs, pharmacy techs, and other low paid health care workers will demand at least 50% higher compensation to stay ahead of the unskilled workers who now make more. Every labor union will demand much higher compensation to keep pace with compensation increases of lower paid workers. Democrats are locked into even more government benefits so look for a spiral of labor shortages for low margin businesses. Democrats than have plans to force almost all companies to deal with labor unions. Even if Democrats do not get a national law forbidding right to work, administrative policies will make it difficult for companies to stop the rise of labor cartels. I see a strong labor cartel future in health care. If you think health care is expensive now, wait until all health care workers join labor cartels. Get ready for health care shortages and much higher costs for treatment. Even high paid health care workers will likely form labor cartels.
Webej
2 years ago
It is important to realize what negative interest rates mean!
It means parties with collateral are being subsidized to take ownership of everything.
The same applies generally to interest rate deductions.
The Arabs say we will only sell oil for $180 a barrel……Russia cheats a bit and say 165…
Yikes! CPI will still not change….
Carl_R
2 years ago
There seems to be a strong correlation between the various PPI numbers, but a much smaller magnitude on the CPI. As Mish says, that is because other things, including services, moderate the magnitude. I’m certainly not expecting the CPI at 20%, but the high intermediate stage PPI numbers would seem to indicate that the CPI won’t be dropping back to 2% anytime soon, and that CPI might move a bit higher. The longer the CPI stays in the 5.5-6.5% range, the more the psychology of people changes to an inflation mindset.
anoop
2 years ago
it means mish and lacy hunt have been wrong. michael burry has been right.
expect shortages everywhere as everyone tries to manipulate their input costs by delaying production until price normalcy returns. and that will only make inflation worse without helping gdp and will further screw up pricing.
they are cutting production. so when builders need it, they’ll have to pay top dollar.
welcome to shortages all around.
Maximus_Minimus
2 years ago
The difference between PPI and CPI is that the former need not be manipulated and hedonically adjusted. The CPI is serious stuff: pensions, salaries, counterfeit central printing depend on it. It just cannot be published untouched.
FromBrussels
2 years ago
DEBT, DEBT and preferably even MORE negative interest rates DEBT is what the, to the brim ‘developed’, world needs in order to keep a insane Ponzi Scheme rat race running and heading towards the inevitable abyss ! The EU is about to ditch the Maastricht budgetary rules still limiting national debt to 70% of GDP and budget deficits to 3% of GDP! Most EU countries , the southern ones in particular( + fn Belgium), have been exceeding the limits for many years in a row now, a obviously unimportant problem that soon will be taken care of, so everything gonna be ‘fine’, only question remaining : how long can a utterly insane monetary policy continue before ‘money’ becomes worthless ? Like Mish asks occasionally ; got gold ?
Relax, those rules are never meant to be followed. Only some old fashioned office rats believed in them, and nobody cared they existed, and how many will notice they’re gone. Just adjusted to street level politics.
Dr. Manhattan23
2 years ago
From Bloomberg via Zerohedge – Speaking at a Morgan Stanley conference this morning, 3M CFO Monish Patowala warned that the outlook is much more like the worst-case scenarios than any overly-optimistic view that markets appear to be imbibing… (headlines via Bloomberg)
*3M SEES AUTO ’21 PRODUCTION -6% ON CHIP SHORTAGE VS -3% EARLIER
*3M EPS IMPACT DUE TO INFLATION, SUPPLY CHAIN DISRUPTIONS: CFO
*3M CFO SAYS AUTO CHIP SHORTAGE DISRUPTIONS TO CONTINUE IN 2022
*3M CFO SEES 2021 EPS IMPACT ON `HIGH END’ OF 65-80 CENT RANGE
*3M CFO: COST OF RAW MATERIALS IS BIGGEST SUPPLY CHAIN CHALLENGE
I can tell you, our portfolio companies are experiencing prices of raw materials getting very expensive. Start of construction is delayed as well. Average wait time is about 2 months. Difficult and costly. Supply chain is really messed up
Since2008
2 years ago
1st!
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*3M SEES AUTO ’21 PRODUCTION -6% ON CHIP SHORTAGE VS -3% EARLIER
*3M EPS IMPACT DUE TO INFLATION, SUPPLY CHAIN DISRUPTIONS: CFO
*3M CFO SAYS AUTO CHIP SHORTAGE DISRUPTIONS TO CONTINUE IN 2022
*3M CFO SEES 2021 EPS IMPACT ON `HIGH END’ OF 65-80 CENT RANGE
*3M CFO: COST OF RAW MATERIALS IS BIGGEST SUPPLY CHAIN CHALLENGE