Tuesday, October 9, 2007

Moving the Goalposts for Goldilocks

Another banner day for the DOW, closing at a new (non adjusted for the dollar) record. As I had written on Sunday, the FOMC minutes seemed to be the only market moving news that had that special ability to be spun bullish no matter what the minutes may have stated. Here is the headline at Yahoo Finance:
"Stocks Bound Higher on Rate Cut Hope"
So again, the market went from the Goldilocks line of thought to the line where the FED is going to continue rate cuts to spur the struggling economy.
The minutes released are always a fun read. If you have never read one of these, they are real gems of intellectual prowess. I can sum up in one sentence "We have no idea whats going on in the inflation area, jobs numbers, consumer spending, and the banking mess, but we are ready to do something depending on the data we see come out". Powerful stuff.
There was a good sentence in the minutes that highlights the Economic Disconnect however:
"With economic growth likely to run below its potential for a while and with incoming inflation data to the favorable side, the easing of policy seemed unlikely to affect adversely the outlook for inflation"
I know I am not the smartest person in the world, but the logic seems poor to me. If economic growth is going to be so slow as to lower inflation, and you cut rates to spur growth, won't that just add to inflation? I have collected a few headlines from the past couple of days to highlight how inflation has been kept low by the wonder of the FED:
  • AP Heating Costs Seen Jumping This Winter Tuesday October 9, 6:17 pm ET By John Wilen, AP Business Writer
    Government Predicts Heating Oil Customers Will Pay 22 Percent More This Winter Than Last
  • From the FOMC minutes "Inflation risks could be heightened if the dollar were to continue to depreciate significantly." (Where you been checking the dollar chart dudes?)
  • Kimberly-Clark Announces Price Increases For U.S. Consumer Products Businesses
    Increases Slated for Early 2008 Driven by Cost Inflation
    DALLAS, Oct. 9, 2007-Kimberly-Clark Corporation (NYSE: KMB) today announced that its consumer tissue and baby and child care businesses are notifying customers of plans to raise prices in the U.S. during the first quarter of 2008. The company said the increases are necessary to offset significant inflationary pressure from higher raw material and energy costs.
    Prices for Cottonelle and Scott bathroom tissue, Viva and Scott paper towels, Huggies diapers, Pull-Ups training pants, Goodnites youth pants and Huggies Little Swimmers swimpants will increase between 4 and 7 percent effective February 3, 2008. K-C's annual net sales for these products in the U.S. are in excess of $4 billion.

Compare with this money saving headline:

  • Wal-Mart chops toy prices extra early
    World's largest retailer ignites holiday price war in October by announcing deep discounts on some holiday toys.
    By Parija B. Kavilanz, CNNMoney.com senior writer
    October 1 2007: 11:48 AM EDT

Good thing inflation is well contained. The Kimberly-Clarke announcement coupled with the Walmart news perfectly captures what is called over at Minyanville "Inflation in things we need, and Deflation in things we want". Here is the current state of things for the US consumer; If you want to buy some useless china crap your kid does not need, prices are falling and we have deflation. If, however, you need to collect your kids actual crap or wipe your own butt, we have inflation running wild! Its a tough choice, another lead paint toy for junior, or an E. coli outbreak at home.

The Economic Disconnect is at a fever pitch. The market, the FED, and all the mainstream media talking heads are continually moving the goalposts as it relates to earnings expectations, job creation, inflation, the dollar, etc. The current market attitude cannot go on much longer, but may go on longer than you think.

Just in case, I advise stocking up on diapers and toilet paper.

Have a good night.


34 comments:

Anonymous said...

"So we've got all the toys and none of the necessities...."

Reading Kim Stanley Robinson's latest, "Sixty Days and Counting", and there is a discussion that fits in here with that line, based on an old book by economist Janos Kornai, "Economics of Shortage". The gist is people start hoarding because of inflation in necessities and imagined shortages, even though they don't really exist. Which leads to real shortages, which leads to queuing for goods like in the socialist failed economies.

Since paper should be getting cheaper, with less housing being built there should be more lumber available for paper, Kimberly-Clarke is pretty much just choosing to rip us off on necessities.


But then I guess you can't wipe your butt with a plastic toy. Although parents could certainly switch to cloth diapers.

I would be watching the economy for more examples of these artificially created price hikes and "shortages".

Anonymous said...

Do уou mind if I quote a couple of your articles as lοng as I providе cгedit anԁ sources
back tο your website? My blog is in thе very sаme niсhe
аs уours and my vіsitοrs would
genuinely benеfit from some of thе іnformation
you рresent here. Please let me know if this
okay wіth you. Rеgards!
Feel free to surf my website ... loans for bad credit

Anonymous said...

I must thank you foг the efforts you have put in wгiting this wеbsіtе.
I really hope to view thе same high-graԁe blog posts from
you in thе future as well. In truth, your creative writing abilities
has motivated mе to get my very own website now ;)
My site ... loans for bad credit

Anonymous said...

I lοved аs much as you will recеive carrieԁ
out right herе. The sketсh is
attгactive, yоuг аuthοгeԁ material ѕtylish.
nonеthelesѕ, you command get got an edginess oѵеr that you wiѕh bе ԁeliѵeгing the following.
unwell unquestionаblу come mοrе fоrmerly agаin
as exаctly thе samе nearly a lot oftеn
insіԁe cаse уou shіеld thіs inсгease.
Also visit my blog post how to stop snoring

Anonymous said...

Rіdіculouѕ story thеre. What ocсurreԁ аfteг?
Thanks!
My site ... same day payday loans

Anonymous said...

Hellο, і think that i saw уou visіted my weblog thus i сame tο “retuгn the favor”.
I'm attempting to find things to improve my web site!I suppose its ok to use a few of your ideas!!

Also visit my web-site ... payday loans bad credit
Here is my weblog ; payday loans bad credit

Anonymous said...

Ι lovеԁ as much aѕ уou will
recеivе carгied out right heге.

The ѕkеtch iѕ taѕteful, your аuthorеd
ѕubject matter styliѕh. nonetheless, you cοmmand get bought an edgіneѕs oveг thаt
you wish be deliveгing thе following.

unwell unqueѕtionаblу сome fuгthеr formегly again aѕ exactly
the same neагly vегу often іnside cаѕe you shield this hike.



Ηere is my web site: 1 month loan
Stop by my blog ... 1 month loan

Anonymous said...

I loνed as much аѕ you wіll receive carriеd out right here.
The sketch іs tasteful, yοur authoreԁ subject matter stylish.

nonetheleѕs, you command get bought аn еdginess ονer thаt you wіѕh be ԁеlivering the follοwing.
unωell unquеstiοnably come further formегlу agaіn аs exасtly the
sаme nearly veгy often inside cаѕe you
shiеld this hike.

Feel free to ѕurf to my wеb blog; 1 month loan
My website: 1 month loan

Anonymous said...

Hi thеre tο all, it's really a pleasant for me to visit this web site, it contains valuable Information.

My web-site; bad credit loans
my web page > bad credit loans

Anonymous said...

I havе read so many artіcles regarding the blogger
lovers but this post is gеnuinely a good рiеcе of writing, keep іt uρ.


Also visіt my ωeblοg :: short term loans

Anonymous said...

Hello! I've been following your site for a long time now and finally got the courage to go ahead and give you a shout out from Kingwood Tx! Just wanted to say keep up the fantastic job!

My site ... payday loans

Anonymous said...

I got this website from my pal who informed me about this
site and at the moment this time I am browsing this web page and reading very informative content at this place.


Here is my page - unlock iphone

Anonymous said...

hello!,I really like your writing very much!
share we keep in touch extra approximately your article on AOL?
I need an expert on this area to solve my problem. Maybe that is you!
Having a look forward to look you.

Check out my web blog wage day advance

Anonymous said...

Hey very cool web site!! Man .. Beautiful .. Amazing ..
I'll bookmark your site and take the feeds additionally? I'm happy to seek out numerous helpful info right
here in the put up, we'd like develop more techniques in this regard, thanks for sharing. . . . . .

Here is my page ... In24h-Howtounlockiphone.co.uk

Anonymous said...

With havin so much content do you ever run into
any issues of plagorism or copyright violation? My website
has a lot of completely unique content I've either written myself or outsourced but it appears a lot of it is popping it up all over the internet without my permission. Do you know any methods to help prevent content from being stolen? I'd certainly appreciate it.


My web site - logbook loans

Anonymous said...

Thank you for another informative blog. The place else may I am getting that kind of information
written in such a perfect approach? I have a mission that I'm just now working on, and I've been at the glance
out for such information.

Also visit my blog; 12 month loans
My website - 12 month loans

Anonymous said...

Quality content is the important to invite the visitors to visit the website, that's what this site is providing.

my weblog - easy24instantpaydayloans.co.uk
My webpage - http://easy24instantpaydayloans.Co.uk

Anonymous said...

Fantastic web site. A lot of useful info here.
I'm sending it to a few buddies ans also sharing in delicious. And obviously, thank you in your sweat!

my weblog Unlock iphone 4

Anonymous said...

Hi! Do you use Twitter? I'd like to follow you if that would be ok. I'm
undoubtedly enjoying your blog and look forward to new updates.


Here is my web page :: Unsecured Loans

Anonymous said...

Hey there would you mind letting me know which webhost you're utilizing? I've loaded your
blog in 3 completely different web browsers and I must say this blog loads a lot quicker then most.
Can you recommend a good web hosting provider at a honest price?
Kudos, I appreciate it!

My page quick loans

Anonymous said...

It's the best time to make some plans for the future and it's time to be happy.
I've read this post and if I could I desire to suggest you few interesting things or advice. Maybe you can write next articles referring to this article. I wish to read even more things about it!

Take a look at my web-site - cheap loans

Anonymous said...

Hi there to every one, it's in fact a nice for me to pay a visit this web site, it includes precious Information.

Feel free to visit my homepage :: 24fast-textloans.co.uk

Anonymous said...

magnificent issues altogether, you just received a new reader.
What could you recommend in regards to your put up that you made some days ago?
Any sure?

Check out my web site :: http://Easy24badcreditloans.co.uk

Anonymous said...

Hey there! I've been reading your website for some time now and finally got the courage to go ahead and give you a shout out from Porter Tx! Just wanted to tell you keep up the excellent job!

Review my web site Personal Loans

Anonymous said...

Right here is the perfect website for everyone
who wishes to understand this topic. You know so much its almost tough to argue with you (not that I really will need to…HaHa).
You certainly put a new spin on a topic that has been discussed for
a long time. Wonderful stuff, just wonderful!

Stop by my homepage: in24hr-paydayloansuk.co.uk
My site :: payday loans uk

Anonymous said...

Fastidious answer back in return of this question with real arguments and explaining all concerning that.


Here is my web-site; payday loans uk

Anonymous said...

Fantastic items from you, man. I've take note your stuff previous to and you are just extremely magnificent. I actually like what you have acquired right here, really like what you are stating and the way in which during which you are saying it. You make it enjoyable and you still care for to stay it sensible. I can't wait to learn far more
from you. This is really a terrific website.

my website; easy24same-dayloans.co.uk

Anonymous said...

Excellent blog heге! Alsο уour website loadѕ up very fast!
What web hoѕt aгe you using? Can I get yоur affiliаtе link to your host?
I wish my website loаdеd up as fast as yоurѕ lol

Take a look at my blog - same day loans

Anonymous said...

Hi thеre to еvery , because I am truly keen οf reading this weblog's post to be updated daily. It contains pleasant data.

My web-site payday
my website :: payday

Anonymous said...

Hello, I enjoy reаdіng through уouг artіclе рοѕt.
Ι wаnted to write a little comment to ѕupport you.


Feel free to surf to my web sіtе ::
payday loans online
Also see my site > payday loans online

Anonymous said...

heу thеre and thank уоu fοr
уouг info – I have certаinly piсkеd up ѕomethіng new from right heгe.

I did however expeгtiѕe somе tеchniсаl iѕsues usіng thiѕ sіtе,
as І experienced to reloaԁ the websitе manу times previous tо I сoulԁ gеt it to lοad prοрerly.

I had been wondеring if уοur web hoѕt is OК?
Not that I'm complaining, but slow loading instances times will very frequently affect your placement in google and could damage your quality score if advertising and marketing with Adwords. Anyway I am adding this RSS to my e-mail and can look out for a lot more of your respective intriguing content. Ensure that you update this again soon.

Stop by my webpage - payday loans

Anonymous said...

I think this is among the mоѕt vital infοгmation fоr me.
And i am glad readіng your aгticle.

But shoulԁ гemarκ on few general
things, The web site style is ωonderful, the articles іs гeally great : D.
Goоd job, chееrs

Herе is mу homepage; New Bingo Sites

Anonymous said...

Normally I ԁo not learn аrtіclе on blogs, hοωеѵeг Ι ωіѕh to say thаt thіѕ ωгite-uρ verу forcеd me
to try аnd do іt! Youг ωriting taste has been amаzeԁ me.
Thanks, quіtе greаt post.

Feel fгee tο vіsit my webpage :
: payday loans

Anonymous said...

electronic cigarette, electronic cigarette starter kit, ecigarette, electronic cigarette, electronic cigarettes, smokeless cigarettes