Just how far can Covid 19 drive down the markets?
Discussion
RonaldMcDonaldAteMyCat said:
Just wait for the inflation to kick in around the western world. The the interest rates. Then the depression. Then there was a war (I may have been sidetracked by Telegraph Road on that last bit...).
Japan didn’t manage to do it despite trying very hard...what makes you think this lot can?loafer123 said:
RonaldMcDonaldAteMyCat said:
Just wait for the inflation to kick in around the western world. The the interest rates. Then the depression. Then there was a war (I may have been sidetracked by Telegraph Road on that last bit...).
Japan didn’t manage to do it despite trying very hard...what makes you think this lot can?1) People's standard of living drops. Not an issue now for governments - just blame it on Covid.
2) Companies go under as they can't produce at a profit and/or have signed contracts for £X last month but the raw materials this month cost £2X. Not an issue now for governments - just blame it on Covid.
3) Production stalls completely as you may as well just hold on to your existing stock since next month it will be worth more. Not an issue now for governments - just blame it on Covid.
4) Balance of Payments issues, inability to afford imports. Not an issue if everyone is in the same boat.
I think that at the moment governments all have a free pass, as long as people don't literally starve to death they can blame every ill-effect of inflation on Covid.
loafer123 said:
RonaldMcDonaldAteMyCat said:
Just wait for the inflation to kick in around the western world. The the interest rates. Then the depression. Then there was a war (I may have been sidetracked by Telegraph Road on that last bit...).
Japan didn’t manage to do it despite trying very hard...what makes you think this lot can?Turns out some tried investing in foreign currencies but the majority just kept it in cash despite the government trying to get the public to invest
Flooble said:
Very much doubt interest rates will move, if inflation did occur I strongly suspect it would just be allowed to run rampant. What is the actual downside of inflation right now? Serious question. Looking at what I used to think were the reasons to keep it under control:
1) People's standard of living drops. Not an issue now for governments - just blame it on Covid.
2) Companies go under as they can't produce at a profit and/or have signed contracts for £X last month but the raw materials this month cost £2X. Not an issue now for governments - just blame it on Covid.
3) Production stalls completely as you may as well just hold on to your existing stock since next month it will be worth more. Not an issue now for governments - just blame it on Covid.
4) Balance of Payments issues, inability to afford imports. Not an issue if everyone is in the same boat.
I think that at the moment governments all have a free pass, as long as people don't literally starve to death they can blame every ill-effect of inflation on Covid.
Job losses. No pay rises as unemployment is high. People starve.1) People's standard of living drops. Not an issue now for governments - just blame it on Covid.
2) Companies go under as they can't produce at a profit and/or have signed contracts for £X last month but the raw materials this month cost £2X. Not an issue now for governments - just blame it on Covid.
3) Production stalls completely as you may as well just hold on to your existing stock since next month it will be worth more. Not an issue now for governments - just blame it on Covid.
4) Balance of Payments issues, inability to afford imports. Not an issue if everyone is in the same boat.
I think that at the moment governments all have a free pass, as long as people don't literally starve to death they can blame every ill-effect of inflation on Covid.
UBI needed.
People vote in different politicians.
Depression/crash. Job losses. No pat rises as unemployment is high.
Prices drop and people don’t starve.
No UBI needed.
People vote in different politicians.
I dunno it’s all just a load of balls.
Covid is just the ultimate bailout patsy/blame tool, and was used as that from day one.
I don’t think we’re gonna see a pop this cycle... not the big paradigm changing one. People are still too happy and easily dumbed down with trinkets like UBI and cheap mortgages/debt and Clap for Carers etc.
The system won’t fail until at least 50% of people are pissed off and make the change.
Inflation seems to me to be surpressed, it would be interesting to understand the true ‘inflation’ - because past year car prices have skyrocketed but only show as ‘2.4%’, whereas other products have stayed similar priced such as food, so may hold the l value down. Would also be good to understand is the CPI measured from actual sales, or available on the market products? So e.g. a Dyson vac may have increased by 10% but if a cheap Chinese vacuum is on the market it brings down the ‘inflation’ figure?
ToastMan76 said:
Inflation seems to me to be surpressed, it would be interesting to understand the true ‘inflation’ - because past year car prices have skyrocketed but only show as ‘2.4%’, whereas other products have stayed similar priced such as food, so may hold the l value down. Would also be good to understand is the CPI measured from actual sales, or available on the market products? So e.g. a Dyson vac may have increased by 10% but if a cheap Chinese vacuum is on the market it brings down the ‘inflation’ figure?
https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukconsumerpriceinflationbasketofgoodsandservices/2021ONS said:
Within each year, the consumer price indices represent the changing cost of a basket of goods and services of fixed composition, quantity and quality. In practice, this is achieved by:
keeping the sample of representative goods and services constant
applying a fixed set of weights to price changes for each of the items such that their influence on the overall index reflects their importance in the typical household budget
taking care to ensure that replacements for brands that are no longer stocked in an individual shop are of comparable quality
keeping the sample of representative goods and services constant
applying a fixed set of weights to price changes for each of the items such that their influence on the overall index reflects their importance in the typical household budget
taking care to ensure that replacements for brands that are no longer stocked in an individual shop are of comparable quality
Flooble said:
It's interesting as it really seems as though the ONS try hard to be fair with the way they measure inflation.
Yet the official figures bear no relation to what I see when I do the shopping. There must be a logical explanation for it, I just haven't worked out what it is.
Isn't it generally a basket of items which are most commonly bought?Yet the official figures bear no relation to what I see when I do the shopping. There must be a logical explanation for it, I just haven't worked out what it is.
So if you are buying let's say a Dyson but they are going up in price and people turn to buy Shark instead then Dyson drops out the basket and Sharp goes in.
Inherently this ensure inflation indicator is kept constrained, until it's too late. You can't find a cheap bagless vacuum cleaner then the inflation rate spikes up.
So it will tell you inflation is going up when it is too late and the faeces has already hit the turbine.
All that really matters is personal inflation.
The official figure isn’t really indicative of anything unless you are indeed that average person who buys lots of cheap electronics every year, etc.
It’d be better to measure essential healthy whole foods, energy and shelter as a basic measure too.
Ie, just living safely and healthily level of inflation... I bet that’s going up faster than we’d like.
The official figure isn’t really indicative of anything unless you are indeed that average person who buys lots of cheap electronics every year, etc.
It’d be better to measure essential healthy whole foods, energy and shelter as a basic measure too.
Ie, just living safely and healthily level of inflation... I bet that’s going up faster than we’d like.
aparna said:
Not sure if relevant, and dated, but on surface, doesn't look like long term trends are up
World agricultural commodity prices to December 2019
Interesting.World agricultural commodity prices to December 2019
Would be good to see sustainable/green/organic or whatever... since that is the world we’re wanting to live in.
Also palm, wheat and sugar... whole ‘foods’ but not ideal for health.
This is just my personal inflation metric. What I pay for and makes up most of my costs.
Quality meat/protein, quality fats, carbs are cheap.
Electricity.
Rent.
Everything else I can live without if needed.
Electricity seems to have been a real kick in the balls this year.
Rent hasn’t moved much for me, rpi tracked, but a new rental would be a huge jump.
Oh and taxes went up too. Council tax way above inflation. Again.
Unless you live on cheap electronics and buy new cars are the time then inflation is probably at 5-6% for me.
Mr Whippy said:
....
Unless you live on cheap electronics and buy new cars are the time then inflation is probably at 5-6% for me.
Interested in some examples? Electricity average today n UK is 14.4 which is a kick in the teeth as I have octopus agile, which prices every half hour, and I think average is 15 something for me, but that's still cheaper than a year or two ago, when it was more like 17 from memory. Unless you live on cheap electronics and buy new cars are the time then inflation is probably at 5-6% for me.
Putting personal inflatoin aside, the bigger question about QE is whether or not the extra money boosts purchasing activity above that economy's capacity. Despite all the QE the economy is still not running at capacity apparently, we still have high unemployment despite all the extra cash being spent on goods and services, so the fashionable logic is there is still room for more printing before we see personal inflation and associated wage increases?
aparna said:
Mr Whippy said:
....
Unless you live on cheap electronics and buy new cars are the time then inflation is probably at 5-6% for me.
Interested in some examples? Electricity average today n UK is 14.4 which is a kick in the teeth as I have octopus agile, which prices every half hour, and I think average is 15 something for me, but that's still cheaper than a year or two ago, when it was more like 17 from memory. Unless you live on cheap electronics and buy new cars are the time then inflation is probably at 5-6% for me.
Putting personal inflatoin aside, the bigger question about QE is whether or not the extra money boosts purchasing activity above that economy's capacity. Despite all the QE the economy is still not running at capacity apparently, we still have high unemployment despite all the extra cash being spent on goods and services, so the fashionable logic is there is still room for more printing before we see personal inflation and associated wage increases?
Groceries are probably slightly up. Happened across some old shopping receipts from when I convinced my wife we should try swapping to Aldi for a cheaper weekly shop. Meat seems to be the main driver in shopping bills increasing, up 25-33% since autumn 2019.
Examples: pack of 2 free range chicken breasts, £3.09 now £3.99, pack of ham £1.09 now £1.39. At the same time, veg appears to have stayed the same or decreased a bit. Milk and eggs, much of a muchness.
jshell said:
Mr Whippy said:
jshell said:
Simpo Two said:
Flooble said:
I wouldn't be surprised if he moves on all the Tech titans. But he probably needs to balance adding millstones to them against the fact that China is booming and is rapidly approaching the point where it will rule the world. The USA has only a few bulwarks against Chinese dominance and the Tech Giants is one of those.
China will run rings round Biden.I’m not sure that I’d running rings around anyone.
It sounds like a recipe for trouble at some point.
sideways sid said:
jshell said:
Mr Whippy said:
jshell said:
Simpo Two said:
Flooble said:
I wouldn't be surprised if he moves on all the Tech titans. But he probably needs to balance adding millstones to them against the fact that China is booming and is rapidly approaching the point where it will rule the world. The USA has only a few bulwarks against Chinese dominance and the Tech Giants is one of those.
China will run rings round Biden.I’m not sure that I’d running rings around anyone.
It sounds like a recipe for trouble at some point.
Don't forget that the West has only been able to reduce emissions and keep tat cheap by specifically outsourcing the manufacture of tat to China. It subsequently smacks somewhat for us to then gob off at China for crappy emissions and appalling labour practices when these only exist because we offshored them to avoid it being on our doorstep. 
Modern China was created by us and our absolute love of buying crap we don't need. And they, very kindly, even lend us the money back so we can put the old tat in storage and get shiny new tat.
It's hard to complain if they then look at that and suspect that one day the tat buyers might run out of debt tokens so beat to have a plan to build proper stuff, to secure the mineral rights in Africa and SA that the old colonialist nations can't be seen to be directly exploiting any longer or to escape the prison cell of oil import dependency to US jailers.
Trump's views on China, once deciphered and translated into English were valid but it's all of our making. In Europe we are even backing China in the power transition by moving everyone away from US oil dependency onto Chinese battery dependency.
It seems fair to reckon that the Chinese economy will surpass that of the US in our lifetime and we then have to see if they send as many gunboats off round the world as the US have done to maintain their control!!
Modern China was created by us and our absolute love of buying crap we don't need. And they, very kindly, even lend us the money back so we can put the old tat in storage and get shiny new tat.
It's hard to complain if they then look at that and suspect that one day the tat buyers might run out of debt tokens so beat to have a plan to build proper stuff, to secure the mineral rights in Africa and SA that the old colonialist nations can't be seen to be directly exploiting any longer or to escape the prison cell of oil import dependency to US jailers.
Trump's views on China, once deciphered and translated into English were valid but it's all of our making. In Europe we are even backing China in the power transition by moving everyone away from US oil dependency onto Chinese battery dependency.
It seems fair to reckon that the Chinese economy will surpass that of the US in our lifetime and we then have to see if they send as many gunboats off round the world as the US have done to maintain their control!!
DonkeyApple said:
Don't forget that the West has only been able to reduce emissions and keep tat cheap by specifically outsourcing the manufacture of tat to China. It subsequently smacks somewhat for us to then gob off at China for crappy emissions and appalling labour practices when these only exist because we offshored them to avoid it being on our doorstep.
Not sure thats entirely correct. We (specifically in the UK) have reduced our emissions from electricity generation hugely and yet the raw power costs are a fairly small cost in any finished good. Cheap labour and low standards, not "emissions" are what have driven the manufacturing abroad. It went long before the UK was setting CO2 targets. The EU are planning to create a "carbon tax" at their borders to ensure that the playing field is as level as possible, precisely to avoid what you are suggesting - ie that domestic producers pay emissions taxes and importers dont.
Phooey said:
Bump. Anyone getting any jitters yet? Is another lockdown (partially) priced in? Or full steam ahead still.
Lockdown didn't seem to have impacted the overall markets in a overtly negative way? What would you price in?If anything it gave a boost to the idea MMT can be used to tide major economies over such events, without huge consequences (for the major companies). Small companies/countries might well be screwed but they don't move the needle on the indexes so much? Likewise certain sectors might be screwed but it seemed balanced by boosts to other sectors?
Phooey said:
Bump. Anyone getting any jitters yet? Is another lockdown (partially) priced in? Or full steam ahead still.
Seems quite remarkable that the markets just shrugged off a pretty big wobble at the beginning of the week.We had a ‘board’ meeting during the week and it was a little disconcerting that our normally super positive MD is expecting everything to implode in the not too distant future. Our order backlog is at insane levels.
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