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

To: mishedlo who wrote (8456)	2/22/2004 9:18:50 PM
From: russwinter	Read Replies (3) \| Respond to of 110194

<What % of finished product prices are commodities?> If you were really reading the posts on inflation here, you wouldn't be asking that question. That's what I would characterize as the diminishment school of debate, i.e: just ignore the important points of your opponent's case. Even so, "commodities" should not be so summarily dismissed, but there are other important ingrediants to this inflation. I (and others) have been illustrating numerous examples of intermediate goods and even service inflation. <plenty of slack to avoid price increases.> Disagree, the Chinese margins selling to customers like WMT, are already razor thin. The reduction of the export tax credit by the Chinese in January eliminates most of it, without even taking into account input price increases. <the affect of price on demand.> You keep throwing this out as if consumer demand was weak? Where's the current evidence of that? biz.yahoo.com biz.yahoo.com They just pull the credit card out, or get a home equity loan,and bingo, buy more crap, and just keep feeding the train wreck. Demand is solid, and inventories are very low. Combine that with shortages, and you have a nasty inflation brew. <Someone posted a PPI of +.8%. Frankly I thought it would be worse. > That's just one month's worth. 9-10% inflation rates don't concern you or Easy Al? <All it takes for Copper to plunge is for demand in China to fall off a bit> Falling off "a bit" is not going to save the situation at the current rates of draw down (5000 mt a day). Nor will resolation of the Sudbury nickel strike. It will take a collapse, and soon. There is absolutely no sign of ANY slowdown. The US consumer and Asians are heading down the track completely out of control.

To: mishedlo who wrote (8456)	2/22/2004 9:42:24 PM
From: Silver Super Bull	Read Replies (1) \| Respond to of 110194

Mish, You present good points. RE: "What % of finished product prices are commodities?" I will agree that it is relatively low. But it is certainly not immaterial. I think there is a real chance of the inflation in raw materials spreading to other areas, including wages, as well. The spread will likely be disproportionate, though, as I can't see wages skyrocketing like commodity prices have (and will.) RE: "Finally you ignore as does Russ, the affect of price on demand." I'll be the first to say that I am extremely concerned about the strength and foundation of this economy. However, I think that we will have a "stagflation"-type environment. There will definitely be problems with people affording certain items as they go up in price. But I think many items, especially oil and gas, will have demand that is fairly inelastic. DB ps: the auto sales are another bubble IMHO, although one that is not recognized...fueled by easy credit, of course.