Musings

September 16, 2023, 8 Comments

Another random musings blog today. BTW–coming soon, an Ask Us Anything blog. Don’t post questions yet. I will post a separate blog for your questions in a couple of days.

 

“Prediction is very difficult, especially if it’s about the future.” — Niels Bohr (who made foundational contributions to quantum theory)

Having said that…

“Labor strikes, Oil prices on the rise driven by OPEC games… it’s September 1973. The risk-reward on the long side in QQQs is horrendous here.”  Beartraps

We need to watch the NASDAQ in particular. Its the more sensitive index to growth, persistent inflation, and recession. Its in the same symmetrical triangle that the SPX is stuck in, per my chart on this blog- here. Bulls don’t want to see a breakdown from the triangle. It will impact the SPX, and it will signify a not-so-soft landing.

Random observations – food for thought

  • So long as energy costs rise (see my last blog) – inflation will remain sticky. This keeps the Fed & BOC in the picture
  • European markets are starting to experience “stagflation” – growth is slowing, inflation sticky.
  • The market rallied in the first half due to AI mania and hopes of an end to the tightening cycle
  • Earning were better than feared this summer but the bar was low. Of note: SPX posted its 3rd consecutive quarter of negative growth
  • High yields persist. Consumers are under pressure – see my recent comments about auto loan qualification and mortgage renewals.
  • On the positive: major technical’s are positive. Nice base breakout through 4200 on the SPX, and its still above the 200 day SMA.
  • Small business confidence is weak – see NFIB in USA and CFIB in Canada reports
  • Michigan sentiment report shows new larger than expected drop in consumer confidence – obviously due to the above factors. Will this continue? Chart below with my notes. Not too worrisome yet, unless that trend builds.
  • Unions continue to rotate through strikes, the latest being UAW (this is a BIG one!). This continues to endorse my call for stagflation–see my total argument and strategy to deal with it on this blog.

 

Short rantskip this next part if you hate my rants. But I simply HAD to say something. BTW–I am not alone on calling out this nonsense.

How stupid does he think we are?

Not as dumb as him, I hope.

Trudeau tells major grocers to stabilize prices

Grocery store profits as the cause of higher prices? Forget the money printing (inflationary), carbon tax (increases cost across the production to distribution cycle), and mass immigration (increased demand) over his term. Nah, it was greedy grocers!

Hey, Justin, ya ever stop to think (yeah, right):

  1. Economics 101: When the cost of the goods, and the distribution of those goods, are higher (carbon tax)  – prices go up!
  2. Economics 101: When money gets printed hither tither by the government, this devalues its purchasing power – prices go up!
  3. Economics 101: 400,000 immigrants each year for years on end. When a business has more customers they increase profits! While some grocers (Loblaws, ironically a Liberal supporter – remember the free fridges they got when nobody else did?) can and will gouge, most do not. Loblaws have been suspected of price gouging. Increased profits are from volume! Name a business who wont make more money if the population of their customer base increases???

Justin…Go ask your Finance Minister to explain these Economic principles. Wait, I forgot! She doesn’t have an economics degree either. What was I thinking?

Justin & Chrystia’s Dumb & Dumber Solution:

If they don’t bring prices down, tax the grocers more! Because, of course, that won’t make prices go up!  

I’ve been saying this for 3 years. Since I began calling for long termed inflation (when everyone said it was transitory):

You can’t fix stupid!

 

 

 

 

8 Comments

  • Hi Keith,
    I too noticed the latest headlines. I agree with all that you said on this topic.
    The government already did their inquiry! Guess what? The large grocers have diversified. Hello, pharmacies and household items!
    Grocers are getting pinched with rising labour costs and transportation costs squeezing their grocery margins.
    When you insert “big brother” into the industry to “force” change, that is really detrimental to our overall business climate. 🤬 Goodbye foreign investment too. 😡
    Did he not learn his lesson from foreign capital mass exiting our oil and gas industry?
    Is this move the push from the NDP?
    Ok, rant over.

    Reply
  • Brooke Sutherland (bloomberg) who concentrates on the Industrial sector commented that the XLI etf ripped higher in the summer months despite the fact that manufacturing has been in contraction for 10 consecutive months . the longest stretch since the great recession.
    Unlike the XLI the economic statistics include small & midsize companies who employ the most people. Is this a reflection of these smaller businesses struggling because of the higher rates & inflation? and is this sustainable?
    I guess if one uses TA and owns XLI it doesn’t matter but it will be interesting to see what happens.

    Reply
  • You left out Marketing boards , where Government appointed people
    approve price increases.

    Reply
  • Awesome, thanks Keith…made my day! I also read the CTF columns re: Liberal stupidity.
    Cannot wait to vote. Dale

    Reply
  • Love these random musing / executive summaries of things you’re pondering in the moment, Keith.
    Very thought-provoking (& valuable) tidbits of food-for-thought.

    Reply

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