interesting interview of JohnJ Murphy on CNBC this morning
he trotted out various charts, with minimal discussions
the interviewer was Ted David, who showed no depth
he also seemed to show little interest in the fallout effects
this is a typical exchange we see nowadays on press/media
the feeling I was left with was sadness, dismay
the public viewers have no clue what is going on, none
the media talking heads are as ignorant as humanly possible
that or illiterate
the interviews are so brief as to lead to little digestion
Murphy showed the USDollar (trade weighted index) chart
he drew the downtrend line, and said it is in "virtual collapse"
down 20% in the last year
no comment, no followup
Murphy showed the S&P chart
he drew the downtrend line, and said
"we are still in a longterm bear market"
but we are attempting to consolidate here since October
Murphy showed a TENyr TNote yield chart
he focused on the time period since October
and again said we are attempting to consolidate
Murphy went back to the dollar, and made some excellent comments
he said the falling dollar is primarily responsible for a new strong bull market in commodities, as seen in the CRB index
he showed the CRB chart, and drew an uptrend line
Murphy tried to make a big point
he said it is not just energy and gold
instead it is across the entire spectrum, as price inflation is now being seen in grains, industrial metals, and much more than energy and gold
Ted David said "so the Fed effort to bring back some inflation is working"
Murphy said "well, we have a bull market in commodities"
that was the end of the interview
here are my comments:
we have a new trend of rising costs of production
from materials, energy, labor, employee health, shipping
this will bring about a profit squeeze in a BIG BIG way
companys still have no pricing power
the end result is further diminishment of earnings and profits
when Asian imports rise in price (should happen soon),
then we will see imported component prices hurt production costs further
the recession is about to take a serious bite very soon
earnings already suck
they are about to get worse, generating corporate losses
layoffs will be the only method to survive
such is the nature of a consumption-based economy
we cannot spend our way into an economic recovery
corporations have stopped investing in capex
now they will see even more scarce profits
as I like to say: there is good inflation, and bad inflation
when it shows up in higher production costs, that is BAD INFLATION
when it shows up in greater spending ability, that is GOOD INFLATION
we have bad inflation coming home to slap us silly
/ jim |
