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Inflation T-Shirt: Making Groceries Barrels of Fun!
The United States has been printing money like a Zimbabwe dictator, and the inevitable result of too many dollars chasing too many goods is inflation.
That's an interesting definition of inflation and one I have not seen before. I've been working under the assumption that too many goods creates a deflationary environment.
We can only hope that there are too many dollars chasing too many goods though. If there are too few dollars in the hands of consumers then who will be buying the abundance of inflation t-shirts? Keep in mind that they are 35% off if you buy 251+ of them.
Deflation T-Shirt: Yield To Deflation
No matter what economic situation you are in, always yield to deflation!
Why does the inflation t-shirt have three 5-star ratings and yet the deflation t-shirt has none? That deflation t-shirt sure doesn't seem to be very popular.
Perhaps the commentary should have said...
The United States has been creating credit like Japan, and the inevitable result of too little credit chasing too many goods is deflation.
All these t-shirts remind me just how well China must be doing these days. They are an unstoppable force. I should probably try to get as much of my nest egg into that country as I can before it is too late to profit off of it.
Two thirds of China's cotton-spinning enterprises unprofitable
The rapid development of China's cotton-spinning industry in the previous decade resulted in fast-expanding capacity, said Xu. After the breakout of the global financial crisis, overseas demand contracted significantly and competition in the domestic market became fierce.
Gross, Roubini Weigh Dueling Chinese Bubbles: William Pesek
China’s plan was to tide the economy over until U.S. consumers begin spending again. Yet a stark reality awaits central planners in Beijing: the global demand its all-important export markets need to thrive won’t turn up as planned.
Disclaimer: All commentary should be taken with a deflationary grain of salt. This is a sarcasm report after all.
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
-
At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
11 hours ago
17 comments:
Another China tidbit from The Market Ticker:
"Next, on "global demand." Remember, Apple got quite the pump on selling iPhones in China. Plural might have been the correct form of the verb, but just barely. As in five.
"China Unicom has sold just five iPhones through a big online retail site in the two weeks since it opened the virtual store, the latest sign that the handset is suffering in China from its high price and lack of Wi-Fi."
Not five million, five hundred thousand, or even five thousand.
Five.
Global demand for those expensive toys eh? I don't know why anyone is surprised at this, given that the average Chinese salary is something like $2/day. Yes, really. Two years of the average worker's salary to buy a phone eh? I think not."
http://tinyurl.com/yjhpjsl
Watchtower,
5 down, 1,325,639,977 to go!
Let's not forget India.
http://aayush.me/post/170423448/how-to-make-the-iphone-3gs-and-apple-itself
OT:
I see where FedEx has announced a 5% increase in ground rates for 2010.
That does not sound deflationary to me. Did they previously decrease rates and overshoot to the downside?
Still holding TIP subject to...
G.H.,
I think FedEx is more a sign of the symptoms than the causes though. Look back to 2008.
http://www.forbes.com/2008/06/02/aviation-airlines-cargo-biz-logistics-cx_ra_0603aviation08_fedex.html
If a customer can't afford to send a package, that's the customers' problem. FedEx built its business model on the premise that it could pass along fuel-cost increases to its customers in the form of a surcharge. It has also been raising its delivery rates to try to offset the high price tag on fuel.
My deflationary stance was partly due to my belief that $80 oil was a short to intermediate term upper limit. So far, so good.
I'm also not expecting much deflation, certainly not the deflation we saw when oil prices collapsed last time. Perhaps disinflation might be a better term. Perhaps simply less inflation than expected would also describe it.
For what it is worth, I'm up slightly on my recent TIP trade (selling it). Hindsight is treating me okay so far, but not as well as I might have expected given that oil has backed off quite a bit.
This isn't the only reason I sold TIP though. I think it could drop even if I'm wrong about short-term inflation. There are a variety of ways real interest rates could rise and I'm admittedly not smart or psychic enough to figure out the most likely way. I can say there aren't that many ways for real interest rates on TIPS to drop much more though. I'm sticking to my belief that 0% is the floor.
And lastly, maybe we already bounced off the 0% floor. The "dead cat" was dropped from a lower altitude so we shouldn't expect a huge bounce. Possible. TIP had a decent day today even as oil dropped (although it did so on low volume).
I'm still sitting on the sidelines though. Short-term TIPS don't look that attractive to me on a risk/reward basis. Although 1.3% in a savings account appears to be a losing bet more than likely, at least I'm not locking in the bet for 5 years or more.
Time will tell.
I am investing in scratch tickets and hoping for that one in a million shot!
New Yorkers even more unwilling to shop
http://www.timesunion.com/AspStories/story.asp?storyID=873868
The Siena survey, conducted by random telephone calls to 955 state residents, comes just a few days after a Retail Council of New York state survey found that 40 percent of retailers said they had a worse Black Friday weekend this year than last.
...
Fifty-two percent of respondents said gasoline prices are a somewhat or very serious problem, up from 45 percent in October.
Not exactly the kind of thing the economy needs heading into Christmas.
GYSC,
Way to think outside the box. I'm picturing a new government stimulus package.
GLUT - Government Lottery for Unemployed Taxpayers
Do you think owning a new home these days is a gamble? So do we! That's why we're offering 6,500 lottery tickets to each new home buyer!
Mark,
I think you may be on to something there!
Is it deflationary when a Fortune 50 corporate mandates a 3 year furlough for 2010 (down from 6 this year)?
meant to state the following:
Is it deflationary when a Fortune 50 company mandates a 3 day furlough for 2010 (down from 6 this year)?
Remy,
Thanks for giving me a new word to Google.
How about 3-day furloughs per month?
How California's 3-day furlough program works
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/27/BUPQ18VR7S.DTL
On July 1, Gov. Arnold Schwarzenegger issued an order forcing most state employees to stay home without pay for three days per month through June 30, 2010.
It's not all bad news though.
California's Squaw Valley Extends Furlough Fridays to State Workers
http://www.utahskier.net/utah_skier/2009/12/californias-squaw-valley-introduces-furlough-fridays-to-state-workers-127-09.html
SQUAW VALLEY USA - Squaw Valley ski resort is bringing "Furlough Fridays" back with $49 ski lift tickets on Fridays for California state employees throughout the resort’s 2009-10 Anniversary season.
It's just mostly bad news.
Tax board's request signals California may see more furloughs
http://www.sacbee.com/topstories/story/2371877.html
"Based on conversations with the Department of Finance, we anticipate that another furlough program will be put in place that extends the three-day furlough to the 2010/11 fiscal year," reads a board analysis of what is called the "Budget Change Proposal."
If that happens, the tax board wants its 5,000 employees exempted. It also wants enough money to add 158 positions and put $14.7 million into overtime and temporary help.
All,
entering into an big inflection point right now.
Global Oil Glut Roils an English Tourist Village
http://online.wsj.com/article/SB125971361419772003.html?mod=googlenews_wsj
The heavy traffic stems from a near-record excess oil supply, a byproduct of the recession, that is prompting producers to stash oil offshore until they can find customers. The excess supply hasn't stopped oil prices from surging almost 80% this year and padding the pockets of big oil producers like Royal Dutch Shell PLC and the Organization of Petroleum Exporting Countries.
Stag, good points all.
FedEx could be wrong this time, I give them credit though for being one of the few co.'s willing to elude to the "R" word long before NBER.
Nov. 26, 2007 - FedEx warns over slowdown
"Fred Smith, the chief executive of FedEx, the logistics giant, has warned that global growth will not be enough to counter a US slowdown, raising doubts over corporate America’s ability to export its way out of a sluggish domestic economy.
The warning from Mr Smith, a respected business leader whose company is both a gauge and a beneficiary of globalisation, will deepen investor pessimism over the prospect that the world economy could “decouple” and survive a US downturn unscathed."
He put reality ahead of earnings and told it like it was. (And so did the CEO of Caterpillar at just about the same time when he said the construction industry was already in recession.)
These were clear clues to anyone paying attention that they had better be poised on the sell buttons. By this time I was already unloading international shares and US sells followed in Dec. '07 and Jan. '08
I guess that's why I tend to regard comments from such sources as something worth regarding. Some people would say they are just "talking their books" but I like to keep an open mind (or try to as best I can, sometimes I fail at it.)
I think that link you referred to was written when oil was about $140/bar. As far as that customer affordability comment, that's interesting but, that's Forbes talking not FedEx.
I thought this was interesting:
"Yet even FedEx is hurting from surging fuel costs and the slowdown in the U.S. economy, which has dampened demand for its U.S. domestic express package and less-than-truckload freight services. In May the company slashed its fourth-quarter earnings forecast to $1.45 to $1.50 per share, down from its previous forecast of $1.60 to $1.80 per share."
RBTL, this was more than just a reflection of rising fuel costs, it was an admission of business falling off a cliff. And would seem to signal deflationary future.
Without having the numbers to prove it, I think they reduced rates on some products before they truly knew how far our .gov was willing to go to put up the smoke screen. A lot of people missed that one.
G.H.,
I do think FedEx is in a good position. Everything seems to be playing into their hands right now. Gasoline is expensive enough to make people think about buying stuff online instead of hitting the malls.
That said, FedEx charges by weight and volume, not by value. We don't know exactly what's in the boxes.
Robotic hamsters are holidays' unlikely new craze
http://www.google.com/hostednews/ap/article/ALeqM5g_FDN4cWWc-47PfOm7wa437nbFlgD9C7BEI00
"The last couple of years the robotic pet has been very popular, but those have been very expensive," like Hasbro's $250 robotic dinosaur Kota the Triceratops, he said. "But here's a version of a robotic pet that only costs $10."
Just something to think about.
Stag,
This early in the holiday shopping season I'm not quite ready yet to accept the premise that it's gasoline prices driving online sales to greater levels than traditional brick and morter sales.
In my view it's a belief by the consumer (yet to be proven) that consumers are saving money, per item, buying online. I would point to the Wal*Mart/Amazon battle as an example.
I vividly remember the last time we were in a situation similar to what you've described:
"I do think FedEx is in a good position. Everything seems to be playing into their hands right now."
The year was 2001, and instead of FedEx it was ebay. Zillions of people (IT "professionals", timeshare salesmen, et. al.) had been handed their pink slips and were finding out that they could neither restore their previous incomes or continue in the same careers. For income, to bridge them until they found a new path, they sold everything they could on ebay. And there were buyers (because there really was no recession in 2001). ebay, FedEx, and UPS were a screaming buy in 2001/2002. And it paid off. Note that this was before the war boost in early 2003. Look at charts of (EBAY), (FDX), and (UPS). They were not a part of the tech bubble crash and they didn't need the war boost to move up, they were already moving up.
Fast forward to today, in 2009 (and since the beginning of the layoff debacle in mid 2008) people are trying to sell some stuff for income. ebay and FedEx and UPS should have been screaming buys since the same time. But they're not. Because individuals are not buying/shipping the stuff that people are trying to sell.
And because the online holiday sales of '09 is not going to provide the same boost that these companies realized during the last recession.
So my premise remains the same. Namely that FedEx stock price, as well as virtually any listed stock, will benefit from a market detached from reality.
All of this, of course, is strictly my opinion, and is derived from a belief that I know everything, which is derived from a mindset detached from reality.
Whew, it's late, I'm tired, and there is so much left to do...
G.H.,
Back at you. No argument from me.
I didn't mean to imply that it was only gasoline prices or even that gasoline prices were the major factor.
I should also point out that you don't see me buying FedEx stock. If I was forced to buy a stock, I could probably do worse. Nobody is forcing me to do anything though.
I think the biggest "mindset detached from reality" is the one that thinks our government has ridden in like a knight in shining armor and has protected us from something far worse. I'm reserving judgment until hindsight gets a crystal clear look.
Hindsight has a pretty clear view of 2004 though. Apparently the government's dotcom rescue attempt that seemed so fantastic at the time had a few unintended consequences. Go figure.
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