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Interest rates will continue higher because we have to feed the debt monster. Oil will rise also as the dollar weakens. Paper assets will drop (deflation) but hard assets will rise.

We are only at the beginning of worldwide stagflation. To think the bond market stops at 4-5% is dreaming.

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Nothing matters if you have a job? The "I'm gonna work from home crowd" will be the cannon fodder for the next downturn in employment. Out of sight, out of mind. And how long can AAPL keep whistling Ave Maria right before kicking you in the knockers? We shall see.

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Two thoughts:

One is that at least some price increases have been simply opportunistic. I know for fa act that's true for building construction materials.

One example is everyone who possibly could charge a "fuel surcharge" on every invoice did so (and still does), even though it was way out of line.

More generally, materials themselves went to crazy levels i think in large part because it became "politically" believable. After all, there was no way for consumers to know what was "reasonable." There are a million examples, but just taking one at random, a 20 ft length of schedule 40 PVC pipe cost about $15 pre-pandemic but jumped to $120 during the height of the fraud and has now dropped back to about $45 and is still falling. The "supply chain" excuse was another thing that the "market" couldn't asses but was probably just an excuse (like "climate change".)

I suspect the same is probably true in all other businesses. I also suspect that prices in general are continuing to fall now because of a lack of demand, not the resurgence of supply.

That said, the real absurdity now is that interest rates are falling. I suspect that is going to be a "bear trap" in many ways because two things are happening nationally if not globally. One is that the US dollar is weakening on an absolute level, regardless of how it may be relative to other currencies. The value of the US dollar has always been based on confidence, because paper is inherently worthless, and the US is circling the drain in multiple ways simultaneously. Fundamentally it's because of the corruption of its "national morality" but that's probably to conceptual for the pragmatists. But it affects everything despite that conscious recognition. (Which, btw, is why any alternative monetary system is doomed until that changes, including a gold or bitcoin "standard". Those are both "outside" and therefore can't fix what's within.)

But the other elephant in the room - which hasn't been integrated yet - is that there is, and will continue to be , a torrent of new debt issuance starting basically now and that supply of bonds will necessarily lower bond prices because the demand won't be enough to absorb them. That also necessarily means that interest rates will therefore increase. And that makes sense because of the above. As the US dollar weakens any lending of them have to require higher nominal returns, which is what interest rates imply.

Personally, I hope that "Wall Street" falls hook, line and sinker for their belief that the Fed is going to lower interest rates. It won't matter even if it tries because the government debt has to be funded and the market is going to eventually realize they're dealing with bankrupt sovereigns and what that implies. More generally, money won't be cheap to lend because its future value will be less, so compensation is required, regardless - in fact especially - if there is much demand.

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Nov 16·edited Nov 16

I’d say eggs price spikes were the victim of chickens dying en masse because bird flu and a coincidence to currency debasement. I would posit the chickens ignored Fed actions, and egg prices coming down 23% are the result of the chicken population rebounding, and chicken egg production increasing subsequently.

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Maybe Santa is bringing coal to the markets this year? I’ve truly only nibbled at these mining stocks. Got a ton of cash on the sidelines. When the time comes we will need a post titled “fire sale of a lifetime, buy buy buy” 😂

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And back in Euphorialand, all is right with the world! (except for today) The DOW, NAZ and SNP are charging...its all puppydogs and rainbows!

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If I could be permitted this mashup: The emperor has no clothes AND winter is coming.

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