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Are We Approaching Another Round Of Stagflation?

|Includes: BHP, RIO, Vale S.A. (VALE)

Not terribly long ago, the 3 big iron ore miners (BHP, RTP, and Vale), announced a major revision in the way contracts are priced, moving from annual pricing, to quarterly pricing. Although this is a particular knife that can cut both ways, I think it can be be safely assumed that the miners see higher prices/demand in the future, rather than the converse.

I'm guessing that producers of met coal are envious, since they're still operating on an annual contract basis. I wonder how long it will take before talk of contract changes blossoms in that segment? Add in relatively high energy costs, and the possibility of stagflation increases.

Given fairly large areas of economic weakness, globally speaking, cost push inflation overlaid onto flattish business activity would result in the "worst of both worlds".



Disclosure: No positions