Pink Elephants And Collapsing Commodities

Summer days tend to run together, but there's enough in the way of idiosyncratic news flow to keep things a modicum of interesting this year. That's due in no small part to an extraordinary macro environment that challenges politicians, policymakers and traders daily. Recession risk remains top of mind, even as exceptional circumstances raise questions about what counts as a "recession." The definition is, of course, totally arbitrary, just like almost all concepts that order our lives, so I su

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10 thoughts on “Pink Elephants And Collapsing Commodities

  1. The strengthening dollar may be the cure to commodity inflation so that demand destruction thru recession is not necessary. How can the FED keep raising rates at 75 basis points every meeting with the dollar strengthening so much ??

      1. Interested in TTF as NG is critical to Europe economic outlook, especially Germany. A severe recession / crisis in Europe will affect the US and the world – economically, politically, etc. As Putin well knows.

        (Also, higher TTF means higher LNG demand thus higher NG price in US – not a big impact on US inflation though.)

  2. Reading this article it struck me that policymakers are focusing on the symptoms not the disease. What is the disease? Structural problems in the economy- and not just one but many. Here is a by no means complete list for the USA. Poor educational attainment in the USA (not talking about higher education here), poor resiliency in goods distribution and supply chains for a blind emphasis on short term profits vs. risk adjusted returns for companies, bloated health care system in the US that delivers terrible care for $ spent, poor spending on public goods/infrascture, poor spending on public health (a public good), poor and inefficient safety net for the bottom 60% of the income/wealth citizens, over leveraged private sector both for consumers and companies, inefficient tax code, a restrictive, inefficient and arbitrary immigration policy, limited policy on climate change and a sensible and long term reduction in carbon footprint… if it was only up to fiscal and monetary policy we know what to do. But we have neglected fixing our longer term problems and this has come home to roost. Inflation will be solved at a very high cost to the bulk of our citizens. The above problems are all linked and cause a poor performing economy- whether you are speaking about real growth or inflation. Inflation and slow growth are the result of substandard long term policy.

    1. Focusing on symptoms rather than root causes is what we do in the good old USA. It’s just good politics. If folks generally agree on the symptoms then trying to eliminate them and ultimately failing to cure the problem is ok because we showed we are really trying to fix stuff. Real problems mostly arise from one common cause, bad management. But our friends and allies are making a nice living being bad managers so best not disturb the apple cart and then another decade of useful time goes away and nothing happens. The infrastructure is still falling apart and while we say we want to fix global warming, we really don’t have the resources or tools to do it and we will fail on another real problem.

  3. Real time market indicators suggest that inflation fighting will be the “last war”. I have never seen a surging dollar and falling commodity prices presage an accelerating rate of inflation in the USA. Quite the opposite. Time for an Albert Edwards post.

  4. I read that Iran is matching Russian discounts in the oil markets- I think that is significant. China and India are probably buyers and I think China must have been a significant buyer during the storage crisis