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

To: ild who wrote (45874)	11/19/2005 4:50:31 PM
From: russwinter	Respond to of 110194

Contrary Investor posed the same question: food sales were actually noticeably up. In looking at PPI above, we failed to mention that the month over month PPI for food was one of the largest percentage gain numbers we've seen in literally decades. OK, here's the deal. Were consumers really just a lot hungrier in October, or is a portion of the strength seen in food retail sales numbers simply price inflation? Although we do not have a definitive answer, it's a question we suggest you begin to think about broadly. As price inflation works it's way into the system, we're going to see "nominal" revenue and sales numbers move higher. It's as simple as that and there's really no way around it. But over the long term, equity markets will not pay up for price inflation. In fact, quite the opposite. In a discussion we did many moons ago, we took a close look at what happened in the 1970's. Nominal revenues and sales exploded, but P/E multiples contracted and stocks really went nowhere point to point. The cold hard fact is that we need to begin addressing the influence of inflationary price increases in reported sales and revenue numbers.