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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (7461)	2/9/2004 2:01:42 PM
From: orkrious	Respond to of 110194

from streetinsight Inflation's Latest Tune: 'We've Only Just Begun' 02/09/04 01:22 PM EST How long can this no-inflation-assuming, steeply-sloped- yield-curve-dependent bond market can keep going? I was never a Carpenters' fan, but I've got that song stuck in my head. I just had a fascinating call from an investor in the trucking-related industry. I've mentioned him before -- he's the guy who's actually hiring real people in this country, in actual factories that still make something here on American soil, and not in Bangalore -- nobody believes it's possible. Anyway, his company uses steel. Thousands and thousands of tons of it. And he has this to say about the rate of price increase in his steel supply: "In my 27 years, I've never seen anything like it." Major mills and mini-mills are raising prices about as fast as they can. Scrap steel that costs $130 a ton last year is now $265 a ton. U.S. Steel has raised prices a total of 50% on him, and they're trying for more. The problem, of course, is China, which has opened mini-mills that use scrap metal that country doesn't generate enough of. But there is also a coke processing unit in Gary, Indiana that went down last year, further hurting steel supply in the U.S. I ask him what can he do about it, and he says "I pay it. Gotta build product, right?" "Right," I say, and wonder how long this no-inflation-assuming, steeply-sloped-yield-curve-dependent bond market can keep going.