Marol

Big Money Is Betting on Inflation, Not the Economy

PS Very interesting article and hypothesis. Do you have other indicators besides buying volume (which I guess could have other causes)?

Big Money Is Betting on Inflation, Not the Economy

Dear Galewhitaker: The consumer will continue to drive (absent carpooling and public trans) as long as it's necessary to EAT -- so commodities prices can safely go up (esp since there are now shortages of many staples, so it takes less buying to use up what's there). In this country, we are experiencing less of a rise bec we use commods less directly -- for example, we buy ready-made bread.

Even so, look at what's up the most -- cheese, eggs, beans and I'd guess chicken (haven't checked) -- exactly what poor people depend on. Don't expect much change until the agribiz lobby is pushed back on ethanol. Eventually (2 years? I'm optimistic) public pressure will have an effect. By then, lots more overseas deaths from hunger of course -- but that's not crucial for us, is it now.

I heard an "insider" on NPR a couple of days ago explaining that in the 70s a decision was made to back financials rather than industry, which is why it's financials that are bailed out. (One big exception was for an airline.)

Public has stood all this in the past, in prior recessions ( and esp stagflation (70s -- Nixon!!! froze price increases). Many other times where the prices have gone up hard for the poor, officially unnoticed. They keep changing the definitions so we can't tell -- for example, taking food and energy out of "core" inflation.

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1. I also don't understand what's been gotten at here.

2. But I do find lists are often useful. As one example, lists of best performers.

Market Outlook: Watch Out, the Signs Can Be Deceiving

Umm.

1. Mr. Soprano, thanks for your list (and the associated work), which I haven't seen before. I'm saving it to read and think about.

2. Britishsteel -- your link doesn't work. There are other petitions for impeachment, BTW, on various grounds. Some for both Bush and Cheney, and some are supported by prominent and respectable Members of Congress.

3. IThinkBig: I thoroughly agree that we need alternative, renewable and safe energy sources -- a big job, to be sure.

Global warming, I'm sorry to say, is real and it is also very complex, like the concept of ecology. We desperately need to deal with it. If the summer is warm, one of the poles could be ice-free next summer, with attendant worldwide ocean level rise, submerging of island nations (already begun), increased ferocity of storms, and on and on. These changes will probably be irreversible. What we don't need is a rush to any half-baked solution that we don't think through -- for example, the ethanol disaster. If anyone here's not aware, it's adding to worldwide food price increases, including countries already facing famine; and it takes more energy to produce than it saves.

There is no reason why we can't conserve lots more energy. It will cost, governmentally and individually, but the "payback" will be fast, and huge. Put another way, it's a great investment, and a lot safer than the current market. There are also lots of related business opportunities.

A long time ago, I lived a while in Sweden. A very cold country, with long distances between cities and lots of nighttime. Although their energy usage per person was half of ours, their usual standard of living at that time was noticeably better than ours is even now. We could learn a lot from such places.

4. Finally, as long as I'm on my soapbox, I would like to point out that the brunt of "healthy" corrections and even depressions will be borne by average people, probably worldwide. As for Americans, most of the middle class has savings in their homes and at least partly in the market, and the working class will be affected indirectly. What people can't cut too much is shelter (at least some form of it), energy for warmth and necessary transportation, and food. And the food that is going up the most in price is exactly that which poor people already depend on -- pasta, bread, tortillas, rice, cereal, cheese, eggs (30% last year) and of course vegetables and fruit. The cost in medical care and emotional problems is also enormous.

In other words, something it's very easy to forget while we focus on these fascinating and complex financial discussions: while corrections may be good for the market and traders with discretionary investment, they are far from healthy for most people. Recessions and depressions cause very real suffering.

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Re: WMT (what else?).

Like many others -- increasing numbers of others -- I won't shop there. Pepe, Mom & Pop do pay them substantially more -- they are required to by law. I will not go into detail here about unallowed bathroom breaks, required signing-in late (i.e., after working for some time) and signing out early, and on and on. You can check it out.

So why, when folks generally believe prices are lower, are they doing so poorly? In part, I suspect, because increasing public awareness of their bad and illegal behavior is shifting public opinion. (I agree with Lawrence: This is one reason why we should not try to eliminate non-pure-financial opinions from this excellent website. As for free speech: it's one of the few American principles agreed upon by both political extremes.)

It is generally considered important for companies to maintain good public relations by behaving well. Nefarious behavior can only be hidden for so long. And then of course there are those darn pesky lawsuits when the truth comes out -- along with far greater publicity, because lawsuits make great headlines.

I can't resist a suggestion: to save some real money on purchases, shop Craigslist! (If they ever go public, I'll be in line for shares.)

Don't Put Yourself in a Losing Position with Options

On BSX and AEO, why did you rebuy the options (which presumably weren't going to be called)?