Hello Again, I have to circle back to a key indicator folks. INFLATION! We all know that too much inflation is bad. It picks our pockets and destroys our wealth. So what’s the latest? Are prices still rising? In some markets, maybe, like rent and labor costs, but there are many other markets that have come down significantly.
This data is taken from the website www.tradingeconomics.com
From their highest levels, wheat is down 48%, steel is down 38%, propane is down 56%, raw gasoline is down 45%, copper is down 22%, lumber is down 68%, and cotton is down 48%. Here’s a big one. Crude oil. Crude oil peaked at about $125/barrel, and now it’s at just $73/barrel. This means crude is down 40%. This is a biggie because it has such a direct impact on the price at the pump which frees up more cash for consumers. It reduces delivery costs and also helps reduce the price of other products like plastics and other industrial applications.
Here’s another one. The Global Container Freight index peaked at about 11,000 in late 2021 and now that index is down near 2,600. That’s a 70% reduction in the cost of shipping freight around the world. Remember seeing the ships waiting in the harbors on the evening news? Not so much anymore right? Capitalism has a funny way of fixing itself.
So what does this all mean? I think it means this. Prices have peaked for many, many things and are even in decline. This reduces the threat of inflation and gives the Fed cover to stop pushing up interest rates so much so fast. In fact, interest rates may actually start to decline again at some point. Eventually the stock market will begin to sniff out these changes and begin to rise in a new bull market that should last for a very long time. And honestly……..I can hardly wait!!
Best Regards,
Mike
Steel Prices, April 2020 – Dec 2022
Lumber Prices, April 2020 – Dec 2022
