COVID Economy

[Jockey]

Raw materials skyrocketed 9+ months ago when the supply chain was first disrupted. Inflation has been 'imminent' for years now with the tax cuts & handouts from the last administration superheating the economy even before the coronavirus stimulus. The Fed/Treasury are confounded as to why there's not much inflation yet, which is why they've softened their inflation target from 'max of 2%' to 'average of 2% over the next few years'.

I'm not a MMT guy, but we should keep printing money for the time being.

100% correct.

Go to CBS On Demand and watch last Sunday’s show. Excellent interview with the Fed chief.

As a bonus, there is a great segment on the work the gov’t does regarding vaccines. Even Bunker Boy couldn’t mess it up.

[TSmith34, Inc.]

There should be inflation coming.  Raw materials have sky rocketed the last 4-5 months.  That pass along is coming.  And it will be quite a while before everyone catches up.  Tied in with the world wide container & boat shortage that existed well before the Suez Canal thing made it worse.

I know this isn't what you meant, but anyone else hear the story on NPR about the boat builder in Maine, called I think "Backbay Yachts"? Their boats go for $500K - $800K, and if you order now they are so backed up they can't deliver until 2023.

Damn, there is an awful lot of money sloshing around.

[jesmu84]

I know this isn't what you meant, but anyone else hear the story on NPR about the boat builder in Maine, called I think "Backbay Yachts"? Their boats go for $500K - $800K, and if you order now they are so backed up they can't deliver until 2023.

Damn, there is an awful lot of money sloshing around.

I don't want to depress you further, but go look at how much the richest americans made during the pandemic.

[MU Fan in Connecticut]

Raw materials skyrocketed 9+ months ago when the supply chain was first disrupted. Inflation has been 'imminent' for years now with the tax cuts & handouts from the last administration superheating the economy even before the coronavirus stimulus. The Fed/Treasury are confounded as to why there's not much inflation yet, which is why they've softened their inflation target from 'max of 2%' to 'average of 2% over the next few years'.

I'm not a MMT guy, but we should keep printing money for the time being.

Since I'm quoting buying and selling raw materials all day, I can say we've just been holding off increasing prices to our customers to see if they settle.  It does not appear that will happen any time soon in conjunction with my suppliers doing the same and only in the last 2 months notifying me of price increases.  We will pass that on and with the long lead times won't go into effect for another 3-5 months in which turn I assume my customer will pass on.........

[Skatastrophy]

Since I'm quoting buying and selling raw materials all day, I can say we've just been holding off increasing prices to our customers to see if they settle.  It does not appear that will happen any time soon in conjunction with my suppliers doing the same and only in the last 2 months notifying me of price increases.  We will pass that on and with the long lead times won't go into effect for another 3-5 months in which turn I assume my customer will pass on.........

And that's the crux of inflation, right? Will the customers of your goods absorb the price change, or will they change their buying behavior because of the now 'too expensive' product. Inflation often occurs when people expects inflation to occur. "Oh, this is now twice as expensive because of inflation what are you going to do?" vs "I'm not going to buy that overpriced thing when I could get it cheaper elsewhere"

The global federation of products has added significant downward pressure on the price of goods sold to consumers (but not services). A lot of the cost increases earlier in the supply chain are being absorbed in the form of hits to margin lower in the supply chain (at least with the manufacturers I've talked to) because of the price pressure. This has to vary wildly by market, though. The wood floors my friends are putting in their new-to-them Chicago mansion are easily 10x what they'd normally be with the materials cost increase + the rush order.

[Goose]

MU Fan in CT

We have been passing on price increases for the past thirty days, to go into effect in thirty days after advised of increase. I think we will start seeing price inflation over the summer. Crazy times.

[GooooMarquette]

I don't want to depress you further, but go look at how much the richest americans made during the pandemic.

Not just during the pandemic. The wealth gap has been rising for decades. Even when the economy is struggling, the richest Americans do fine.

[JWags85]

I know this isn't what you meant, but anyone else hear the story on NPR about the boat builder in Maine, called I think "Backbay Yachts"? Their boats go for $500K - $800K, and if you order now they are so backed up they can't deliver until 2023.

Damn, there is an awful lot of money sloshing around.

I read the story the other day, Back Cove Yachts.  My read wasn’t so much “people have more money than they know what to do with” but also, people can’t travel, can’t eat out, looking for “safe” activities, so people looked into boats.  Then you had a lot of manufacturing and supply chain issues, plus labor, and there you were.  It was kind of a perfect storm as opposed to “everyone has money to burn on yachts” cause he said it wasn’t some relentless flow of new buyers.

But the free money flying around is nuts.  My assembly/manufacturing lead at work has no market experience.  Talking to him this week, he didn’t really grasp limit vs market orders, needed explanation about “paper gains” cause he thought any gains in stock or crypto each day would just go into his account as profit...yet he’s up a few grand in crypto and stocks over the last 2 months cause the money printer is just fueling everything upwards.  It’s nuts cause I know there are thousands more like him 

[GooooMarquette]

I read the story the other day, Back Cove Yachts.  My read wasn’t so much “people have more money than they know what to do with” but also, people can’t travel, can’t eat out, looking for “safe” activities, so people looked into boats.  Then you had a lot of manufacturing and supply chain issues, plus labor, and there you were.  It was kind of a perfect storm as opposed to “everyone has money to burn on yachts” cause he said it wasn’t some relentless flow of new buyers.

But the free money flying around is nuts.  My assembly/manufacturing lead at work has no market experience.  Talking to him this week, he didn’t really grasp limit vs market orders, needed explanation about “paper gains” cause he thought any gains in stock or crypto each day would just go into his account as profit...yet he’s up a few grand in crypto and stocks over the last 2 months cause the money printer is just fueling everything upwards.  It’s nuts cause I know there are thousands more like him

Definitely a lot of this going on in many sectors.

It's like the boom in fitness equipment: rowing machines, spinning bikes, weight equipment and such...often costing big $$$. But lots of people are spending money on that stuff because gyms are closed, at limited capacity or they just don't feel safe going there.

[TSmith34, Inc.]

I read the story the other day, Back Cove Yachts.  My read wasn’t so much “people have more money than they know what to do with” but also, people can’t travel, can’t eat out, looking for “safe” activities, so people looked into boats.  Then you had a lot of manufacturing and supply chain issues, plus labor, and there you were.  It was kind of a perfect storm as opposed to “everyone has money to burn on yachts” cause he said it wasn’t some relentless flow of new buyers.

But the free money flying around is nuts.  My assembly/manufacturing lead at work has no market experience.  Talking to him this week, he didn’t really grasp limit vs market orders, needed explanation about “paper gains” cause he thought any gains in stock or crypto each day would just go into his account as profit...yet he’s up a few grand in crypto and stocks over the last 2 months cause the money printer is just fueling everything upwards.  It’s nuts cause I know there are thousands more like him

Yes, thanks for the correction the name, I thought I didn't quite catch it right. You are correct,  COVID was also a factor both in supply chain back-ups and increased demand from people looking for safe activities outdoors. But that is a crapload of demand for boats that cost 2-3x the average house.

Your story re your manufacturing lead also is a cautionary tale IMO. It reminds me of the internet bubble of 1999-2001 where people with no unnatural carnal knowledgeing clue were pouring money into companies that had no unnatural carnal knowledgeing realistic business plan...and you had "analysts" pumping stocks that were trading at 700x REVENUES and had absolutely no way to turn a profit.

[MU Fan in Connecticut]

MU Fan in CT

We have been passing on price increases for the past thirty days, to go into effect in thirty days after advised of increase. I think we will start seeing price inflation over the summer. Crazy times.

Our main brass supplier in Mexico notified us of major increases last month.  Our secondary brass supplier in Peru says their pricing is still good so we are trying to switch to them where we can.   But the customers who have the Mexico raw material PPAP'd in are in for a big surprise.

Out aluminum guy has been increasing every month this year. 

[MU Fan in Connecticut]

MU Fan in CT

We have been passing on price increases for the past thirty days, to go into effect in thirty days after advised of increase. I think we will start seeing price inflation over the summer. Crazy times.

Goose
Are you having container issues? 
As late as December we would call and be able to get a container in 1-2 weeks.
2021 - call and take first available and now it's 5-6 weeks out and a few days before pick-up you're notified it's delayed a week.

[rocky_warrior]

cautionary tale IMO. It reminds me of the internet bubble of 1999-2001 where people with no unnatural carnal knowledgeing clue were pouring money into companies that had no unnatural carnal knowledgeing realistic business plan...and you had "analysts" pumping stocks that were trading at 700x REVENUES and had absolutely no way to turn a profit.

You don't say...
https://www.cnbc.com/2021/04/15/theres-a-single-new-jersey-deli-doing-35000-in-sales-valued-at-100-million-in-the-stock-market.html

[Goose]

MU Fan

We normally stay out if the logistics side of things but have been forced into over the past few months. Containers are a mess and will be until after the holiday rush late this summer. Shipping by air is a challenge at the moment. Once the money guys figure out the added shipping costs we will see additional price increases. This has been a very stressful time for us. We do a lot with Cummins and they keep wanting more product and shipped faster. The bottleneck in the auto industry is real.

[JWags85]

You don't say...
https://www.cnbc.com/2021/04/15/theres-a-single-new-jersey-deli-doing-35000-in-sales-valued-at-100-million-in-the-stock-market.html

To be fair, there is a difference between tech companies and SPACs having insane valuations due to inflation and easy free Fed money...and this which clearly seems to be a fraudulent shell company scheme.  Feels like Boiler Room all over again

[Skatastrophy]

To be fair, there is a difference between tech companies and SPACs having insane valuations due to inflation and easy free Fed money...and this which clearly seems to be a fraudulent shell company scheme.  Feels like Boiler Room all over again

That deli only has 63 shareholders. Should be easy to round them up for questioning.

[rocky_warrior]

To be fair, there is a difference between tech companies and SPACs having insane valuations due to inflation and easy free Fed money...and this which clearly seems to be a fraudulent shell company scheme.  Feels like Boiler Room all over again

Of course there's a difference. It's just one point on the spectrum on the disconnect from reality.

Anyhow, that's all more "market" than economy. But while I'm blathering on, the semiconductor problem is getting real. Not just high end chips. A design my company is finalizing can't get the planned usb-c power delivery chip for something like 19 weeks. Now, we can demo with a similar pin-compatible chip and hack in a power supply, but the chip we're trying to get is something that would be used to charge a cellphone (on the phone side). Scary how these things just aren't available.

[MU82]

Of course there's a difference. It's just one point on the spectrum on the disconnect from reality.

Anyhow, that's all more "market" than economy. But while I'm blathering on, the semiconductor problem is getting real. Not just high end chips. A design my company is finalizing can't get the planned usb-c power delivery chip for something like 19 weeks. Now, we can demo with a similar pin-compatible chip and hack in a power supply, but the chip we're trying to get is something that would be used to charge a cellphone (on the phone side). Scary how these things just aren't available.

Very good idea to include semiconductors in any infrastructure plan. They are vital to America's way of life.

[Skatastrophy]

Very good idea to include semiconductors in any infrastructure plan. They are vital to America's way of life.

Bullish for $MU

[rocky_warrior]

You don't say...
https://www.cnbc.com/2021/04/15/theres-a-single-new-jersey-deli-doing-35000-in-sales-valued-at-100-million-in-the-stock-market.html

OTish, but since I posted it, there is some follow-up:
https://www.cnbc.com/2021/04/22/100-million-new-jersey-deli-company-delisted-from-otc-market.html

[JWags85]

OTish, but since I posted it, there is some follow-up:
https://www.cnbc.com/2021/04/22/100-million-new-jersey-deli-company-delisted-from-otc-market.html

As expected....

https://www.cnbc.com/2021/04/26/100-million-new-jersey-deli-company-owner-kills-consulting-deal-with-shareholder.html

[MU82]

My heart goes out to small landlords who own a property or three, or maybe a couple of small apartment buildings, and haven't been able to collect most or all of their rent for more than a year now because the government has made it illegal to foreclose on those who can't pay rent.

Their bills haven't stopped -- mortgage, insurance, property taxes, water, HOA fees, etc. There are no national or state programs (that I know of anyway) to help them. Many of them are bleeding money, and could lose their properties because they can't pay their mortgages and other bills.

It's a sad, and rarely discussed, story from the pandemic.

[JWags85]

My heart goes out to small landlords who own a property or three, or maybe a couple of small apartment buildings, and haven't been able to collect most or all of their rent for more than a year now because the government has made it illegal to foreclose on those who can't pay rent.

Their bills haven't stopped -- mortgage, insurance, property taxes, water, HOA fees, etc. There are no national or state programs (that I know of anyway) to help them. Many of them are bleeding money, and could lose their properties because they can't pay their mortgages and other bills.

It's a sad, and rarely discussed, story from the pandemic.

It’s interesting, cause when they stopped foreclosures, this came up.  The swell from social media, and the younger generation, was almost gleeful.  Like “too bad”, “landlords are already rich” etc...

It was the same disconnect not processing how there are small landlords who basically surviving off their properties the same was just because someone is a “CEO” or a business owner doesn’t mean their company isn’t a multi million or billion dollar megolith.  Just can’t differentiate the varied levels of the business or title.

I remember talking to multiple people who found it BAFFLING that landlords couldn’t just waive rent for a couple months and expecting to collect rent was unmitigated greed.

[MU82]

It’s interesting, cause when they stopped foreclosures, this came up.  The swell from social media, and the younger generation, was almost gleeful.  Like “too bad”, “landlords are already rich” etc...

It was the same disconnect not processing how there are small landlords who basically surviving off their properties the same was just because someone is a “CEO” or a business owner doesn’t mean their company isn’t a multi million or billion dollar megolith.  Just can’t differentiate the varied levels of the business or title.

I remember talking to multiple people who found it BAFFLING that landlords couldn’t just waive rent for a couple months and expecting to collect rent was unmitigated greed.

For the record, when I talk about money being thrown at CEOs -- even the sucky ones -- I'm talking about huge corporations.

And yes, you're right that scale matters. I remember when my daughter moved to Seattle and was looking for an apartment, one that she looked at was in an 8-unit complex. The owner showed it to us. He was a 50-ish guy who had been laid off during the recession and managing that building and one other he bought was how he was planning to support himself. I'm guessing he did pretty darn well in the decade to follow, but if 3, 4, 5, 6 or more of his tenants haven't paid him for a year now, that could be devastating from a cash-flow viewpoint (and other viewpoints). I feel really bad for folks like that.

[JWags85]

For the record, when I talk about money being thrown at CEOs -- even the sucky ones -- I'm talking about huge corporations.

And yes, you're right that scale matters. I remember when my daughter moved to Seattle and was looking for an apartment, one that she looked at was in an 8-unit complex. The owner showed it to us. He was a 50-ish guy who had been laid off during the recession and managing that building and one other he bought was how he was planning to support himself. I'm guessing he did pretty darn well in the decade to follow, but if 3, 4, 5, 6 or more of his tenants haven't paid him for a year now, that could be devastating from a cash-flow viewpoint (and other viewpoints). I feel really bad for folks like that.

Yep.  My sister’s first apartment in Chicago was in Bucktown.  She lived on the first floor and her landlord and family lived on the second floor.  They were very simple, blue collar people who bought it in foreclosure.  Even at that, the only way they could afford it and rising assessment/taxes were to continually renting out the first floor.  They obviously could swing a few months here and there when tenants swapped over, but 4-6 months+? No way.  They were incredible to my sister at 22 living on her own for the first time.  I can only hope they’ve managed to ride this out