Inflation : 40 Year High

[Warhippy]

14 minutes ago, ronthecivil said:

How? If it was easy to do so it would probably already have been done. If you tax the hell out of these companies, a greater percent end up cutting production, cutting jobs, and some cease to exist. That reduces taxes, hits pension plans and peoples mutual funds in their RRSPs, and likely doesn't do anything to affect prices.

 

Why invest in the first place if it's all taken away by the government? In this socialist paradise, why bother working?

The first and most essential step is actually to stop the endless top down purchases by the largest companies that are killing competition.

 

Enacting and leaning on strong anti trust laws would be the single most effective thing we could do.  Allowing to the growth and encouragement of competition that will not either be purchased or killed by the largest companies in their field would be the single most effective thing that the government could do without interfering with the market.

[Warhippy]

Well then.  I am sure this won't upset the masses.

 

https://www.cbc.ca/news/business/us-ceo-pay-1.6466492

 

Whatever its composition, the chasm in pay between CEOs and the rank-and-file workers they oversee keeps widening. At half the companies in this year's pay survey, it would take the worker at the middle of the company's pay scale at least 186 years to make what their CEO did last year. That's up from 166 a year earlier.

At Walmart, for example, the company said its median associate made $25,335 in compensation last year. That means half its workers made more, and half made less.

That's up 21 per cent from $20,942 US a year earlier and came as the company's average hourly wage for U.S. associates rose from $14.50 US in January 2021 to more than $17 currently. That increase was bigger than the raise CEO Doug McMillon got, on a percentage basis. But his 13.7 per cent raise netted him a total package valued at $25.7 million.

Edited May 26, 2022 by Warhippy

[Boudrias]

1 hour ago, Warhippy said:

Well then.  I am sure this won't upset the masses.

 

https://www.cbc.ca/news/business/us-ceo-pay-1.6466492

 

Whatever its composition, the chasm in pay between CEOs and the rank-and-file workers they oversee keeps widening. At half the companies in this year's pay survey, it would take the worker at the middle of the company's pay scale at least 186 years to make what their CEO did last year. That's up from 166 a year earlier.

At Walmart, for example, the company said its median associate made $25,335 in compensation last year. That means half its workers made more, and half made less.

That's up 21 per cent from $20,942 US a year earlier and came as the company's average hourly wage for U.S. associates rose from $14.50 US in January 2021 to more than $17 currently. That increase was bigger than the raise CEO Doug McMillon got, on a percentage basis. But his 13.7 per cent raise netted him a total package valued at $25.7 million.

I think you are identifying one of the major issues facing capitalism. While the gap has always been there it has grown more than ever. Your earlier point in another post is also on target. M&A activity has gobbled up companies into bigger entities that reduce competition. Leaving the conversation at that does not cover the full dynamic. M&A can produce stronger companies, more innovative companies and can produce cheaper goods. Yes, the opposite can also happen. When you look at specific industries like tech and the bio sciences M&A is a given. It provides better sources of capital for R&D and maintains the attraction for the youngest and brightest to pursue their careers with a possible end game of a buyout. 

 

How does this fix income disparity? Not sure. As an investor I don't like managements that feather their own nests at the expense of shareholders. Shareholders are a diverse and largely unorganized constituency. Many take shots at investors but the truth is that dividend income is likely less than a 3% return on invested capital combined with the possibility of capital gains. The ugly reality is that capital growth is not guaranteed and often does not happen. When you talk about executive compensation you have to insure that stock issuance is included. Many boards today demand that their directors and executives are invested in the company. An effort to bring their interests into allignment with shareholders. Many reasons for income disparity. What I took for granted growing up in the 50's & 60's doesn't exist anymore. Used to be able to graduate high school (or not) and go directly into good paying jobs that you could raise a family on. That era is/was somewhat unique to history and not often duplicated. IMHO society has to invest more into the education system and combine that with social support that has more defined outcomes.  

 

    

[Gurn]

3 days ago ice milk, at Freshco ,was $5 per 4ltr tub.

Today, it is $6.47  .....................................           a 29.4% jump

 

 

[flat land fish]

1 hour ago, Boudrias said:

I think you are identifying one of the major issues facing capitalism. While the gap has always been there it has grown more than ever. Your earlier point in another post is also on target. M&A activity has gobbled up companies into bigger entities that reduce competition. Leaving the conversation at that does not cover the full dynamic. M&A can produce stronger companies, more innovative companies and can produce cheaper goods. Yes, the opposite can also happen. When you look at specific industries like tech and the bio sciences M&A is a given. It provides better sources of capital for R&D and maintains the attraction for the youngest and brightest to pursue their careers with a possible end game of a buyout. 

 

How does this fix income disparity? Not sure. As an investor I don't like managements that feather their own nests at the expense of shareholders. Shareholders are a diverse and largely unorganized constituency. Many take shots at investors but the truth is that dividend income is likely less than a 3% return on invested capital combined with the possibility of capital gains. The ugly reality is that capital growth is not guaranteed and often does not happen. When you talk about executive compensation you have to insure that stock issuance is included. Many boards today demand that their directors and executives are invested in the company. An effort to bring their interests into allignment with shareholders. Many reasons for income disparity. What I took for granted growing up in the 50's & 60's doesn't exist anymore. Used to be able to graduate high school (or not) and go directly into good paying jobs that you could raise a family on. That era is/was somewhat unique to history and not often duplicated. IMHO society has to invest more into the education system and combine that with social support that has more defined outcomes.  

 

    

I think what we are seeing in North America is a bit of a plateau by the start of low population growth.  As North America was settled there was huge amounts of room for cities and towns to grow.  Capitalism really needs that demand to function.  What we are seeing now is like the tail end of a pyramid scheme.  There is not enough entrants at the bottom to drive the rest of the economy forward.  I’m no historian but I would imagine Europe has already gone through this a few times as large groups left their countries for greener pastures abroad only now families are smaller so population growth is a challenge.  Inflation will take some time to reel in as the supply chain is distressed and high commodity prices will take more time than normal to self correct as the push to go green has limited investor interest in producing conventional fuels and driven up inputs like fertilizer which will curtail the food industries ability to respond to demand.

[nuckin_futz]

14 minutes ago, flat land fish said:

I think what we are seeing in North America is a bit of a plateau by the start of low population growth.  As North America was settled there was huge amounts of room for cities and towns to grow.  Capitalism really needs that demand to function.  What we are seeing now is like the tail end of a pyramid scheme.  There is not enough entrants at the bottom to drive the rest of the economy forward.  I’m no historian but I would imagine Europe has already gone through this a few times as large groups left their countries for greener pastures abroad only now families are smaller so population growth is a challenge.  Inflation will take some time to reel in as the supply chain is distressed and high commodity prices will take more time than normal to self correct as the push to go green has limited investor interest in producing conventional fuels and driven up inputs like fertilizer which will curtail the food industries ability to respond to demand.

Japan has had depressed birth rates for some time and the zombie economy to go with it. Then again South Korea (I believe) has even worse birth rates and are doing way better than Japan. As for the low birth rates in the States. Their economy (and ours) is predicated on a growing population. If the existing population is not reproducing fast enough then immigrants are coming. You can bank on that.

[Boudrias]

As an aside. Our club was having a truck shipment sent from Brandford, Ontario to the Kootenays and was quoted $5000 last fall. The trip is now being quoted at $15,000. I guess we should have had one of the truck protestors in Ottawa back haul that load.  

[nuckin_futz]

4 minutes ago, Boudrias said:

As an aside. Our club was having a truck shipment sent from Brandford, Ontario to the Kootenays and was quoted $5000 last fall. The trip is now being quoted at $15,000. I guess we should have had one of the truck protestors in Ottawa back haul that load.  

Those quotes remind me of the dry bulk shipping rates for global tankers/containers. The rates are all over the map. I have no idea how any one manufacturer can work that into their budgets. Makes me think of how airline's price seats. I have no idea how they decide their rates. Seems to make little sense. One day there are 20 seats left on a flight and they are $600. The next day there are still 20 seats available and now they are $700.

[Boudrias]

1 hour ago, nuckin_futz said:

Those quotes remind me of the dry bulk shipping rates for global tankers/containers. The rates are all over the map. I have no idea how any one manufacturer can work that into their budgets. Makes me think of how airline's price seats. I have no idea how they decide their rates. Seems to make little sense. One day there are 20 seats left on a flight and they are $600. The next day there are still 20 seats available and now they are $700.

Tell me about it. I paid double the rate others did to fly to Maui. 

 

I truck transport they used to have an hourly rate for the tractor and then whatever trailer configuration. We were talking about gasoline prices earlier and yet truckers pay much more for diesel fuel. Contrary to the Ottawa uproar I feel sorry for these people. The majority scrape by.  

[StanleyCupOneDay]

24 minutes ago, Boudrias said:

Tell me about it. I paid double the rate others did to fly to Maui. 

 

I truck transport they used to have an hourly rate for the tractor and then whatever trailer configuration. We were talking about gasoline prices earlier and yet truckers pay much more for diesel fuel. Contrary to the Ottawa uproar I feel sorry for these people. The majority scrape by.  

Boudrias I think you’re wrong on this one. I do feel for Canadians struggling to get by as do most here I’m sure, but the protest wasn’t about cost of living if you remember the signs present. It was about yelling how much they hated our prime minister and vaccine mandates that the US had and we have no control over. Let me be clear on this: If they had just decided to protest every day on the capital lawn or in downtown Ottawa I would have supported their right to protest even if I think the reason is dumb. Blocking roads and borders with vehicles is just hurting themselves as well as taking our economy hostage. That is where most here, including myself drew the line. It’s unacceptable for anyone for any issue to do what they did. I’d say the same thing if O’Toole was in power and a bunch of progressives were doing the blockades. We can’t allow our economy to halt over any political issue period.

Edited May 26, 2022 by StanleyCupOneDay

[Warhippy]

1 hour ago, StanleyCupOneDay said:

Boudrias I think you’re wrong on this one. I do feel for Canadians struggling to get by as do most here I’m sure, but the protest wasn’t about cost of living if you remember the signs present. It was about yelling how much they hated our prime minister and vaccine mandates that the US had and we have no control over. Let me be clear on this: If they had just decided to protest every day on the capital lawn or in downtown Ottawa I would have supported their right to protest even if I think the reason is dumb. Blocking roads and borders with vehicles is just hurting themselves as well as taking our economy hostage. That is where most here, including myself drew the line. It’s unacceptable for anyone for any issue to do what they did. I’d say the same thing if O’Toole was in power and a bunch of progressives were doing the blockades. We can’t allow our economy to halt over any political issue period.

I don't feel bad at all for anyone who took part in Ottawa.

 

I DO feel bad for owner/operators that pay ridiculous prices for fuel though.  yes there ARE tax breaks and yes there ARE programs for minor assistance.  But many owner operators are literally being priced out of their careers due to fuel costs.  I feel sorry for them because without them this entire nation comes to a stand still.

We never invested in quality rail.  We have one major highway.  Without trucks shipping north to south and to smaller cities this nation is completely done for.  If there IS a government plan that would help people find price breaks, it can be found by helping truckers and long haulers lower their cost of operation.

[Chris12345]

3 hours ago, Boudrias said:

Tell me about it. I paid double the rate others did to fly to Maui. 

 

I truck transport they used to have an hourly rate for the tractor and then whatever trailer configuration. We were talking about gasoline prices earlier and yet truckers pay much more for diesel fuel. Contrary to the Ottawa uproar I feel sorry for these people. The majority scrape by.  

I LOVE Maui!

[Boudrias]

17 hours ago, StanleyCupOneDay said:

Boudrias I think you’re wrong on this one. I do feel for Canadians struggling to get by as do most here I’m sure, but the protest wasn’t about cost of living if you remember the signs present. It was about yelling how much they hated our prime minister and vaccine mandates that the US had and we have no control over. Let me be clear on this: If they had just decided to protest every day on the capital lawn or in downtown Ottawa I would have supported their right to protest even if I think the reason is dumb. Blocking roads and borders with vehicles is just hurting themselves as well as taking our economy hostage. That is where most here, including myself drew the line. It’s unacceptable for anyone for any issue to do what they did. I’d say the same thing if O’Toole was in power and a bunch of progressives were doing the blockades. We can’t allow our economy to halt over any political issue period.

I won't get into the Ottawa protest other than to say that if protesters were breaking laws they should have been arrested from the get go. Enforce the laws instead of hand wringing. The concern I expressed about truckers had to do with the increased fuel costs they are facing not about Ottawa protesting. 

[StanleyCupOneDay]

6 hours ago, Boudrias said:

I won't get into the Ottawa protest other than to say that if protesters were breaking laws they should have been arrested from the get go. Enforce the laws instead of hand wringing. The concern I expressed about truckers had to do with the increased fuel costs they are facing not about Ottawa protesting. 

How do you arrest hundreds in their vehicles? It was a logistical and practical impossibility. You’re right that they should have been arrested for those blockades, but how exactly is that to be achieved? Truckers keep our economy moving and allow us to buy whatever we want to. I support them, they are extremely valuable to our economy. I absolutely feel sorry for the increased costs in fuel that they’re getting hit by, but that’s the fault of greedy corporations deciding they need to make even more profit then the billions they receive yearly.

Edited May 27, 2022 by StanleyCupOneDay

[RUPERTKBD]

On 5/26/2022 at 12:50 PM, Boudrias said:

As an aside. Our club was having a truck shipment sent from Brandford, Ontario to the Kootenays and was quoted $5000 last fall. The trip is now being quoted at $15,000. I guess we should have had one of the truck protestors in Ottawa back haul that load.  

As Ricky would say, "Get two birds stoned at once"....

[RUPERTKBD]

On 5/26/2022 at 3:46 PM, Warhippy said:

I don't feel bad at all for anyone who took part in Ottawa.

 

I DO feel bad for owner/operators that pay ridiculous prices for fuel though.  yes there ARE tax breaks and yes there ARE programs for minor assistance.  But many owner operators are literally being priced out of their careers due to fuel costs.  I feel sorry for them because without them this entire nation comes to a stand still.

We never invested in quality rail.  We have one major highway.  Without trucks shipping north to south and to smaller cities this nation is completely done for.  If there IS a government plan that would help people find price breaks, it can be found by helping truckers and long haulers lower their cost of operation.

Exactly. Lets bear in mind that the drivers who showed up for the Ottawa protest did not represent the majority of Canadian truckers

[Warhippy]

And on to the Eurozone.

 

8.1%?

 

Hmmm

 

Seems that number might be a shade higher than they're reporting

 

https://www.cbc.ca/news/business/euro-inflation-1.6471969

 

Eurozone inflation hit a record 8.1 per cent in May, amid surging energy and food costs fuelled in part by Russia's war in Ukraine.

Annual inflation in the 19 countries that use the euro soared past the previous record of 7.4 per cent reached in March and April, according to the latest numbers published Tuesday by the European Union statistics agency, Eurostat.

Inflation in the eurozone is now at its highest level since record-keeping for the euro began in 1997.

Soaring prices are weighing on household finances and making it more urgent for officials to act quickly to head off further increases in the cost of living.

[nuckin_futz]

Why the Bank of Canada might hit the brakes sooner rather than later

• The Bank of Canada decision is on Wednesday
•  
• 

 

The Bank of Canada decision is on Wednesday and a 50 basis point hike is fully priced in.

CIBC thinks the market is right with 88% implied odds of another 50 bps hike on July 13 but then the BOC will be at 2.00% and won't get to the 2.78% implied by the OIS market by year end.

 

That's because the housing market is rapidly slowing.

"Large excess demand in Canada is much more concentrated in one area — housing. That also just happens to be the area of the economy that is the most sensitive to interest rate increases, and an area that recent home resale data suggests is already starting to slow from the 'exceptionally high' levels that the Bank of Canada described in its last policy statement."

They expect the BOC and Macklem to sound hawkish on Wednesday so there's no trade in fading CAD strength yet but will be watching commentary on housing closely.

"Any admission that the housing market is already responding to higher interest rates should also be seen as an admission that excess demand is about to become less excessive. That is one of the key reasons why we think that, after another 50bp hike in July, the pace of hikes will slow down, and the Bank won’t need to take rates any higher than the 2.5% mid-point of its neutral band.”

 

If/when the Bank of Canada disconnects from Fed rate hikes, there's potential downside in the loonie. I think we would be seeing that already if not for the incredible pricing in oil and gas; but that's something that looks increasingly likely to continue.

 

I spoke with BNNBloomberg yesterday about the Canadian dollar and Bank of Canada.

 

 

Edited May 31, 2022 by nuckin_futz

[Warhippy]

22 minutes ago, nuckin_futz said:

Why the Bank of Canada might hit the brakes sooner rather than later

• The Bank of Canada decision is on Wednesday
•  
• 

 

The Bank of Canada decision is on Wednesday and a 50 basis point hike is fully priced in.

CIBC thinks the market is right with 88% implied odds of another 50 bps hike on July 13 but then the BOC will be at 2.00% and won't get to the 2.78% implied by the OIS market by year end.

 

That's because the housing market is rapidly slowing.

"Large excess demand in Canada is much more concentrated in one area — housing. That also just happens to be the area of the economy that is the most sensitive to interest rate increases, and an area that recent home resale data suggests is already starting to slow from the 'exceptionally high' levels that the Bank of Canada described in its last policy statement."

They expect the BOC and Macklem to sound hawkish on Wednesday so there's no trade in fading CAD strength yet but will be watching commentary on housing closely.

"Any admission that the housing market is already responding to higher interest rates should also be seen as an admission that excess demand is about to become less excessive. That is one of the key reasons why we think that, after another 50bp hike in July, the pace of hikes will slow down, and the Bank won’t need to take rates any higher than the 2.5% mid-point of its neutral band.”

 

If/when the Bank of Canada disconnects from Fed rate hikes, there's potential downside in the loonie. I think we would be seeing that already if not for the incredible pricing in oil and gas; but that's something that looks increasingly likely to continue.

 

I spoke with BNNBloomberg yesterday about the Canadian dollar and Bank of Canada.

 

 

Hmmm...

 

I think that's a mistake.  The housing metric has always been skewed due to the 3 biggest markets  Using that as your basis to stop is like rolling out the fire hoses during a fire and just deciding it will burn itself out 

[nuckin_futz]

Bank of Canada hikes benchmark rate by 50 basis points, as expected

• Bank of Canada overnight rate to 1.50% from 1.00%

Highlights of the June 1, 2022 Bank of Canada interest rate decision.

• Inflation likely move even higher in the near term before beginning to ease
• The risk of elevated inflation becoming entrenched has risen
• Ukraine war is dampening the outlook, particularly in Europe
• Canadian economic activity is strong and the economy is clearly operating in excess demand
• companies are reporting widespread labour shortages
• Housing market activity is moderating from exceptionally high levels
• growth in the second quarter is expected to be solid
• interest rates will need to rise further
• the Governing Council is prepared to act more forcefully if needed to meet its commitment to achieve the 2% inflation target

The comment about acting 'more forcefully' is a strong indication that they're likely to hike by 50 bps again in July. That was about 80% priced in just before the BOC decision. USD/CAD has risen to 1.2634 but that comes with broad USD strength and some risk aversion hitting at the same time.

 

 

Full statement:

The Bank of Canada today increased its target for the overnight rate to 1½%, with the Bank Rate at 1¾% and the deposit rate at 1½%. The Bank is also continuing its policy of quantitative tightening (QT).

 

Inflation globally and in Canada continues to rise, largely driven by higher prices for energy and food. In Canada, CPI inflation reached 6.8% for the month of April – well above the Bank’s forecast – and will likely move even higher in the near term before beginning to ease. As pervasive input price pressures feed through into consumer prices, inflation continues to broaden, with core measures of inflation ranging between 3.2% and 5.1%. Almost 70% of CPI categories now show inflation above 3%. The risk of elevated inflation becoming entrenched has risen. The Bank will use its monetary policy tools to return inflation to target and keep inflation expectations well anchored.

 

The increase in global inflation is occurring as the global economy slows. The Russian invasion of Ukraine, China’s COVID-related lockdowns, and ongoing supply disruptions are all weighing on activity and boosting inflation. The war has increased uncertainty and is putting further upward pressure on prices for energy and agricultural commodities. This is dampening the outlook, particularly in Europe. In the United States, private domestic demand remains robust, despite the economy contracting in the first quarter of 2022. US labour market strength continues, with wage pressures intensifying. Global financial conditions have tightened and markets have been volatile.

 

Canadian economic activity is strong and the economy is clearly operating in excess demand. National accounts data for the first quarter of 2022 showed GDP growth of 3.1 percent, in line with the Bank’s April Monetary Policy Report (MPR) projection. Job vacancies are elevated, companies are reporting widespread labour shortages, and wage growth has been picking up and broadening across sectors. Housing market activity is moderating from exceptionally high levels. With consumer spending in Canada remaining robust and exports anticipated to strengthen, growth in the second quarter is expected to be solid.

 

With the economy in excess demand, and inflation persisting well above target and expected to move higher in the near term, the Governing Council continues to judge that interest rates will need to rise further. The policy interest rate remains the Bank’s primary monetary policy instrument, with quantitative tightening acting as a complementary tool. The pace of further increases in the policy rate will be guided by the Bank’s ongoing assessment of the economy and inflation, and the Governing Council is prepared to act more forcefully if needed to meet its commitment to achieve the 2%  inflation  target.