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Author Topic: So much for inflation being "transitory"  (Read 14769 times)

Lennys Tap

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Re: So much for inflation being "transitory"
« Reply #125 on: September 22, 2022, 11:14:53 PM »
So you are saying you sold 90% of your equities? And took the cap gain hit?

Taking profits and paying cap gains tax on a market that looks this vulnerable should never be viewed as “taking a hit”. Is watching profits turn to losses a win because you can sell and “save” on your taxes? Unless you’re on your deathbed with a big gain and you want your heirs to get a step up in the purchase price holding on (for tax purposes) to a stock you think has topped and is going south is stupid.

« Last Edit: September 22, 2022, 11:33:54 PM by Lennys Tap »

MU82

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Re: So much for inflation being "transitory"
« Reply #126 on: September 23, 2022, 07:04:46 AM »
Costcoxhad its earnings call after close yesterday. CEOs usually like to keep things positive at these things, even when times aren't swell, and Costco's did, too. But I thought Richard Galanti was pretty straightforward in discussing the challenges right now.

Here's Galanti when asked if he was seeing any "light at the end of the tunnel" on inflation:

Well, again, anecdotally, when we talked to the buyers, they’re starting to see a few examples, whether it’s something like outdoor, patio, furniture or barbecue grill where steel prices are coming down, and we’re reminded by Craig and Ron or the buyers reminded at the budget meeting when prices were going up, make sure you understand why they’re going up. Is it -- what piece of it is raw material costs? What piece of it is freight costs? And when these things come down, you better be on the phone with them calling them saying, when are going to get a reduction?

And so I think in part because of our limited selection -- our limited number of SKUs and a huge volume, I think our buyers know pretty darn well a lot of the cost components of these things. And that, I think, bodes well for us. But again, at the end of the day, we are seeing -- I think it is a little light at the end of the tunnel. Certainly, container rates have come down. Container shortages have improved. The port delays have improved, all that things go into it. And as raw material prices come down -- and FX generally helps you and hurts you. When we report a foreign company’s earnings in U.S. dollars, and the currency has gone down 10%, it’s 10% less earnings that we report. But at the same token, since we’re using U.S. dollars in a lot of things, not just in the U.S. to buy different supplies and raw materials from other places, that helps you a little bit.

And again, I think it’s -- could something happen tomorrow to change this? Sure. But at least we’re seeing the things going -- starting to go in the right direction. Hopefully, that bodes better for not just us, but everyone.


So he's not jumping up and down and saying everything's terrific, but he's not standing on a ledge, either. I've heard this from a few other CEOs, too -- things are still not great, and they expect some difficulties ahead, but many of them are seeing positive signs.

Again, I am not celebrating. But long-term, I'm hopeful. And I also know history. Things were beyond just a little rough during the Great Recession for several years, but Costco -- and the entire economy -- DID emerge from that and had a heck of a decade afterward.
“It’s not how white men fight.” - Tucker Carlson

Goose

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Re: So much for inflation being "transitory"
« Reply #127 on: September 23, 2022, 08:05:17 AM »
82

One thing I forgot to mention in my post on the current issues is the velocity of money. IMO it was one of the best ways to measure the economy and I believe the velocity has slowed in a big time way, and more importantly, in a very quick time frame. I can only speak on my own experiences, but I see our firms cashflow every day and incoming has stalled. To date, we have received under 70% of our expected incoming cash in the month of September. We will be higher by the end of the month, but nowhere near 100%.

As for your post on the long term, I do not disagree that things will be brighter down the road. We may differ on when down the road happens. I believe there is going to be significant damage inflicted to many people around the world and that is what causes me concern on how long things will take. I have no idea of the % of people ill prepared for a serious downturn, but my gut says it is far more than we think it is. We avoided two possible depressions IMO, the housing bubble mess and the start of the pandemic and it was 100% avoided because our government did everything in their power to avoid it.

IMO, it was avoided because they could throw everything to avoid it and they did so because they know how vulnerable overall society is to such an event. I do not think sending stimulus checks saved the day, but % interest rates and QE did. I truly believe they needed to save the day, but how many times can they do it?

Again, I hope my beliefs are completely off target and my quotes are used against me in a year or two, or sooner. That being said, I do not think underestimating what a real economic mess would look like is wise.

MU Fan in Connecticut

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Re: So much for inflation being "transitory"
« Reply #128 on: September 23, 2022, 08:34:12 AM »
Costcoxhad its earnings call after close yesterday. CEOs usually like to keep things positive at these things, even when times aren't swell, and Costco's did, too. But I thought Richard Galanti was pretty straightforward in discussing the challenges right now.

Here's Galanti when asked if he was seeing any "light at the end of the tunnel" on inflation:

Well, again, anecdotally, when we talked to the buyers, they’re starting to see a few examples, whether it’s something like outdoor, patio, furniture or barbecue grill where steel prices are coming down, and we’re reminded by Craig and Ron or the buyers reminded at the budget meeting when prices were going up, make sure you understand why they’re going up. Is it -- what piece of it is raw material costs? What piece of it is freight costs? And when these things come down, you better be on the phone with them calling them saying, when are going to get a reduction?

And so I think in part because of our limited selection -- our limited number of SKUs and a huge volume, I think our buyers know pretty darn well a lot of the cost components of these things. And that, I think, bodes well for us. But again, at the end of the day, we are seeing -- I think it is a little light at the end of the tunnel. Certainly, container rates have come down. Container shortages have improved. The port delays have improved, all that things go into it. And as raw material prices come down -- and FX generally helps you and hurts you. When we report a foreign company’s earnings in U.S. dollars, and the currency has gone down 10%, it’s 10% less earnings that we report. But at the same token, since we’re using U.S. dollars in a lot of things, not just in the U.S. to buy different supplies and raw materials from other places, that helps you a little bit.

And again, I think it’s -- could something happen tomorrow to change this? Sure. But at least we’re seeing the things going -- starting to go in the right direction. Hopefully, that bodes better for not just us, but everyone.


So he's not jumping up and down and saying everything's terrific, but he's not standing on a ledge, either. I've heard this from a few other CEOs, too -- things are still not great, and they expect some difficulties ahead, but many of them are seeing positive signs.

Again, I am not celebrating. But long-term, I'm hopeful. And I also know history. Things were beyond just a little rough during the Great Recession for several years, but Costco -- and the entire economy -- DID emerge from that and had a heck of a decade afterward.

MU82 - That's exactly what I posted here the first week of September.  Raw material prices have dropped significantly in the last 6 months.  Gas has dropped for 2+ months now.  Containers and transportation are way noticeably improved since the first of the year.  There are no delays and prices have dropped a hair.  I added that many companies still have high inventory of raw material that they bought at the higher price (because they had to, because of longer lead times which is also dropping) and this older inventory is getting used up and you can expect price decline as the next raw material purchase batch enters company inventory. 

MuggsyB

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Re: So much for inflation being "transitory"
« Reply #129 on: September 23, 2022, 09:02:11 AM »
82

One thing I forgot to mention in my post on the current issues is the velocity of money. IMO it was one of the best ways to measure the economy and I believe the velocity has slowed in a big time way, and more importantly, in a very quick time frame. I can only speak on my own experiences, but I see our firms cashflow every day and incoming has stalled. To date, we have received under 70% of our expected incoming cash in the month of September. We will be higher by the end of the month, but nowhere near 100%.

As for your post on the long term, I do not disagree that things will be brighter down the road. We may differ on when down the road happens. I believe there is going to be significant damage inflicted to many people around the world and that is what causes me concern on how long things will take. I have no idea of the % of people ill prepared for a serious downturn, but my gut says it is far more than we think it is. We avoided two possible depressions IMO, the housing bubble mess and the start of the pandemic and it was 100% avoided because our government did everything in their power to avoid it.

IMO, it was avoided because they could throw everything to avoid it and they did so because they know how vulnerable overall society is to such an event. I do not think sending stimulus checks saved the day, but % interest rates and QE did. I truly believe they needed to save the day, but how many times can they do it?

Again, I hope my beliefs are completely off target and my quotes are used against me in a year or two, or sooner. That being said, I do not think underestimating what a real economic mess would look like is wise.

Goose,

It's becoming pretty clear that the Fed cannot lower inflation alone with incremental interest rate increases.  Lowering medical costs and our deficit could eventually help, but in the grand scheme of things the amount is fractionsl and the impact won't  happen soon enough.  My biggest concern are energy costs which could be insane in some places during the winter months.  Most of Europe is a complete cluster fk.  It's rather discouraging to me thar we have 40 yr highs in inflation and our current solutions have exacerbated the problems.  Our entire supply/demand dynamic is completely off kilter. 

Silkk the Shaka

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Re: So much for inflation being "transitory"
« Reply #130 on: September 23, 2022, 09:29:35 AM »
Full employment pushing up wages.   

Continued supply chain issues in China as well as a record breaking heat wave.

Corporate profits way up.

Chip shortage. 

Grocery prices up

Fuel prices down.

If the railroads strike, expect a huge spike.

All age cohorts are participating in the labor market at pre-pandemic levels except for the boomers, who took the COVID market ride and retired early. That's why the labor market is so constrained. The only way to get that cohort back into the workforce is to crush their 401k's. Hence, the market is down and the Fed will continue to tighten until the market pushes the boomers back in the pool. It is what it is but personally I'm holding off putting cash to work until that happens.

Herman Cain

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Re: So much for inflation being "transitory"
« Reply #131 on: September 23, 2022, 09:52:46 AM »
Herman

Our clients range in size from well funded start ups to publicly trading companies and I am seeing disturbing trends. These clients are across many segments of our economy and we are not industry or product specific and money flow is slowing quickly.

For my business I believe we are in a very strong position, provided our clients pay their bills. Our A/R is at record high and past due is at record high. Our biggest clients simply are paying extremely slowly and getting slower. Much of time is spent on chasing money from companies I believe may be struggling.

Would love your opinion, but I think banks are facing major write offs in the coming quarters. Thoughts?

Currently at our firm, we are watching expenditures more than ever. I can take some pain personally to navigate a storm at work and doing just that. I believe the short term pain is worth the long term opportunity.
Goose
Early this year we took a conservative posture and amended our bank lines . We are a middle market company and my experience is when things go South credit gets restricted  so I wanted to get while the gettin was good so to speak. So we were able to get 5 year facilities in the low to mid 9 figures range .

Recently we were told by our banks we were lucky we chose that path . A number of banks barely passed their stress tests Also , all banks ended up taking major mark downs to their loan portfolio . So the process of credit restriction is happening .

It will be a while though before banks take actual loan losses for credit defaults . As most companies still have decent balance sheets that they built up during the easy money times .

If we get another energy price jolt things could get uglier
« Last Edit: September 23, 2022, 10:28:50 AM by Herman Cain »
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MU82

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Re: So much for inflation being "transitory"
« Reply #132 on: September 23, 2022, 10:12:09 AM »
82

One thing I forgot to mention in my post on the current issues is the velocity of money. IMO it was one of the best ways to measure the economy and I believe the velocity has slowed in a big time way, and more importantly, in a very quick time frame. I can only speak on my own experiences, but I see our firms cashflow every day and incoming has stalled. To date, we have received under 70% of our expected incoming cash in the month of September. We will be higher by the end of the month, but nowhere near 100%.

As for your post on the long term, I do not disagree that things will be brighter down the road. We may differ on when down the road happens. I believe there is going to be significant damage inflicted to many people around the world and that is what causes me concern on how long things will take. I have no idea of the % of people ill prepared for a serious downturn, but my gut says it is far more than we think it is. We avoided two possible depressions IMO, the housing bubble mess and the start of the pandemic and it was 100% avoided because our government did everything in their power to avoid it.

IMO, it was avoided because they could throw everything to avoid it and they did so because they know how vulnerable overall society is to such an event. I do not think sending stimulus checks saved the day, but % interest rates and QE did. I truly believe they needed to save the day, but how many times can they do it?

Again, I hope my beliefs are completely off target and my quotes are used against me in a year or two, or sooner. That being said, I do not think underestimating what a real economic mess would look like is wise.

We don't differ on when down the road happens, because I have neither predicted nor suggested anything. I don't know. It could be a year, it could be 5, it could be longer. The one thing I have "predicted" is that eventually the economy will improve and take the stock market with it, or vice versa, because that has always happened. And we agree on that, too.
“It’s not how white men fight.” - Tucker Carlson

MU82

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Re: So much for inflation being "transitory"
« Reply #133 on: September 23, 2022, 10:13:16 AM »
MU82 - That's exactly what I posted here the first week of September.  Raw material prices have dropped significantly in the last 6 months.  Gas has dropped for 2+ months now.  Containers and transportation are way noticeably improved since the first of the year.  There are no delays and prices have dropped a hair.  I added that many companies still have high inventory of raw material that they bought at the higher price (because they had to, because of longer lead times which is also dropping) and this older inventory is getting used up and you can expect price decline as the next raw material purchase batch enters company inventory.

I remember that post of yours. Thanks for the update. There is still a long way to go, maybe years. I'm hopeful, but then again I'm generally an optimistic guy.
“It’s not how white men fight.” - Tucker Carlson

Merit Matters

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Re: So much for inflation being "transitory"
« Reply #134 on: September 23, 2022, 10:16:49 AM »
People getting what they voted for, and they deserve it good and hard.
All Lives Matter

Goose

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Re: So much for inflation being "transitory"
« Reply #135 on: September 23, 2022, 10:41:37 AM »
Herman

Thank you for the reply. I very much respect your opinions and posts and value your business knowledge being shared on scoop.


4everwarriors

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Re: So much for inflation being "transitory"
« Reply #136 on: September 23, 2022, 11:24:29 AM »
People getting what they voted for, and they deserve it good and hard.



Hope day cum too der census next tyme around, aina?
"Give 'Em Hell, Al"

Merit Matters

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Re: So much for inflation being "transitory"
« Reply #137 on: September 23, 2022, 11:46:18 AM »


Hope day cum too der census next tyme around, aina?
Fat chance. Every empire has fallen. We probably need a reset anyways.
All Lives Matter

Hards Alumni

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Re: So much for inflation being "transitory"
« Reply #138 on: September 23, 2022, 11:55:24 AM »
82

One thing I forgot to mention in my post on the current issues is the velocity of money. IMO it was one of the best ways to measure the economy and I believe the velocity has slowed in a big time way, and more importantly, in a very quick time frame. I can only speak on my own experiences, but I see our firms cashflow every day and incoming has stalled. To date, we have received under 70% of our expected incoming cash in the month of September. We will be higher by the end of the month, but nowhere near 100%.

As for your post on the long term, I do not disagree that things will be brighter down the road. We may differ on when down the road happens. I believe there is going to be significant damage inflicted to many people around the world and that is what causes me concern on how long things will take. I have no idea of the % of people ill prepared for a serious downturn, but my gut says it is far more than we think it is. We avoided two possible depressions IMO, the housing bubble mess and the start of the pandemic and it was 100% avoided because our government did everything in their power to avoid it.

IMO, it was avoided because they could throw everything to avoid it and they did so because they know how vulnerable overall society is to such an event. I do not think sending stimulus checks saved the day, but % interest rates and QE did. I truly believe they needed to save the day, but how many times can they do it?

Again, I hope my beliefs are completely off target and my quotes are used against me in a year or two, or sooner. That being said, I do not think underestimating what a real economic mess would look like is wise.

Stimmy checks 100% saved the day.

Hards Alumni

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Re: So much for inflation being "transitory"
« Reply #139 on: September 23, 2022, 11:56:55 AM »
All age cohorts are participating in the labor market at pre-pandemic levels except for the boomers, who took the COVID market ride and retired early. That's why the labor market is so constrained. The only way to get that cohort back into the workforce is to crush their 401k's. Hence, the market is down and the Fed will continue to tighten until the market pushes the boomers back in the pool. It is what it is but personally I'm holding off putting cash to work until that happens.

hehe yep

Hards Alumni

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Re: So much for inflation being "transitory"
« Reply #140 on: September 23, 2022, 11:57:59 AM »
People getting what they voted for, and they deserve it good and hard.

Brain dead

4everwarriors

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Re: So much for inflation being "transitory"
« Reply #141 on: September 23, 2022, 12:17:44 PM »
Yule bee singin' a different toone wen bus service takes a dump, hey?
"Give 'Em Hell, Al"

jesmu84

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Re: So much for inflation being "transitory"
« Reply #142 on: September 23, 2022, 12:20:32 PM »
The railroad situation is FAR from resolved.

Biden white house may have celebrated a bit before the finish line on this one.

The good news is that the media has moved on.

jesmu84

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Re: So much for inflation being "transitory"
« Reply #143 on: September 23, 2022, 12:22:12 PM »
People getting what they voted for, and they deserve it good and hard.

Based on this post, I'm assuming your position is that the Trump administration would have avoided the inflation we currently have.

If true, can you explain how they would have solved pandemic-related supply chain problems, corporate price gouging and economic impact of the Russian invasion?

Pakuni

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Re: So much for inflation being "transitory"
« Reply #144 on: September 23, 2022, 12:22:36 PM »
Fat chance. Every empire has fallen. We probably need a reset anyways.

The stupid is strong with this one.

The Sultan of Semantics

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Re: So much for inflation being "transitory"
« Reply #145 on: September 23, 2022, 12:34:41 PM »
Stimmy checks 100% saved the day.


Most definitely. The third one was likely not needed, and the expanded child tax credit was a bit of an overkill, but the checks most definitely worked.
“True patriotism hates injustice in its own land more than anywhere else.” - Clarence Darrow

Scoop Snoop

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Re: So much for inflation being "transitory"
« Reply #146 on: September 23, 2022, 02:09:35 PM »
Nm
« Last Edit: September 23, 2022, 02:24:49 PM by Scoop Snoop »
Wild horses couldn't drag me into either political party, but for very different reasons.

PBRme

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Re: So much for inflation being "transitory"
« Reply #147 on: September 23, 2022, 02:55:45 PM »

Most definitely. The third one was likely not needed, and the expanded child tax credit was a bit of an overkill, but the checks most definitely worked.

Maybe, But did my 20 yo college student need to get $1400 checks .... Nope

The targeting mechanism needs some refinement.
Peace, Love, and Rye Whiskey...May your life and your glass always be full

Hards Alumni

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Re: So much for inflation being "transitory"
« Reply #148 on: September 23, 2022, 03:10:38 PM »
Yule bee singin' a different toone wen bus service takes a dump, hey?

Unless you expect the state and local government to default, I think Imma be just fine, kin.

The Sultan of Semantics

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Re: So much for inflation being "transitory"
« Reply #149 on: September 23, 2022, 03:11:55 PM »
Maybe, But did my 20 yo college student need to get $1400 checks .... Nope

The targeting mechanism needs some refinement.


I don't disagree with that.  But there is a reason that our recovery has been faster and stronger than other similar countries.

https://home.treasury.gov/news/featured-stories/the-us-economic-recovery-in-international-context
“True patriotism hates injustice in its own land more than anywhere else.” - Clarence Darrow

 

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