Morning Note: Inflation’s A Must

Fed Chair J. Powell suggested in last Wednesday’s press conference that inflation was concentrated in select areas of the economy.

Here was my take last Thursday morning:

“…he pressed the notion that inflation is concentrated in merely a few “reopening” areas of the economy (utter hogwash!).”

And, well, here’s from July’s ISM Manufacturing Purchasing Manager’s Survey (released yesterday).

Commodities Up in Price
Adhesives; Aluminum (14); Aluminum Products (4); Ammonia; Cable & Harnesses; Capacitors; Caustic Soda (2); Coatings (4); Copper (14); Corrugate (10); Corrugated Packaging (9); Crude Oil (2); Diesel Fuel (7); Electrical Components (8); Electrical Motors; Electronic Components (8); Ethylene; Freight (9); High-Density Polyethylene (HDPE) (7); Hydraulic Components; Labor — Temporary (3); Lumber* (13); Medium-Density Fiberboard (MDF); Natural Gas; Ocean Freight (8); Packaging Film; Packaging Supplies (8); Pallets; Paper Products; Phosphates; Plastic Resins (11); Polyethylene (6); Polyols; Polypropylene (13); Polyvinyl Chloride (PVC) Products (2); Printed Circuit Board Assemblies (PCBAs); Propylene; Resin-Based Products (6); Resins; Resistors; Semiconductors (6); Shipping Containers; Solvents; Steel (12); Steel — Carbon (8); Steel — Hot Rolled (11); Steel — Scrap (3); Steel — Stainless (9); Steel Products (11); Steel Wire; Sulfuric Acid; Totes; Wood (2); and Wood Products (2).

Commodities Down in Price
Copper; and Lumber*.


Asian equities leaned slightly green overnight, with 9 of the 16 markets we track closing higher.

Europe’s positive on the morning, with 16 of the 19 bourses we follow trading up as I type.

US stocks are lower to start the day: Dow down 97 points (0.28%), SP500 down 0.21%, SP500 Equal Weight down 0.30%, Nasdaq 100 down 0.27%, Nasdaq Comp down 0.31%, Russell 2000 down 0.62%.

The VIX (SP500 implied volatility) is up 3.39%. VXN (Nasdaq 100 i.v.) is up 2.84%.

Oil futures are down 2.43%, gold’s up 0.02%, silver’s up 0.47%, copper futures are down 2.06% and the ag complex is up 0.10%.

The 10-year treasury is up (yield down) and the dollar is up 0.02%.

Led by solar stocks, Indian equities, utilities stocks, KRBN (carbon credits) and silver — but dragged by Viacom, oil services stocks, Latin American equities, base metals futures and uranium miners — our core portfolio is off 0.20% to start the session.

From my latest entry (yesterday) to our internal market log:

“…it’s not that I am wedded to the notion that structural inflation will be a real thing going forward — I remain open to all possibilities — it’s that I see developments that take us markedly away from much of what has kept inflation at bay these past few decades. And I fully recognize that other than an all-out debt jubilee, inflation literally has to trend notably higher for the next several years if the powers that be are to tackle the federal debt bubble that now exceeds 120% of GDP.”

Have a great day!


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