Double Dip Recession?

[shalab]

How likely is the double dip when India is expected to grow @ 8.5%, Brazil @ 7%, China in the 7-8% range? We will see food and clothing inflation next year because of drought and high prices for cotton.

 

 

[biaggio]

I can feel the food inflation..I bought panini buns for $0.69 per bun last week (I didn t look at the price, then too embarassed to return)

 

Are there any investment ideas based on food inflation. Who will do well? Farmers. Wil grocers? Will they be able to pass along price increases to customers?

 

Has anyone looked at NWF.un on TSE- I think probably close fully valued now- I thought it had a moat with most of their stores in rural areas -provider of food, general merchandise to small rural communities-often not many alternatives- Large box competitors are several hour drive away. Customers supported by various government programs.

 

[Zorrofan]

How likely is the double dip when India is expected to grow @ 8.5%, Brazil @ 7%, China in the 7-8% range? We will see food and clothing inflation next year because of drought and high prices for cotton.

 

Are you talking globally or just the US? THe US is still very likely it go into a double dip or at least very slow growth (1% or less). As fast as the "BRIC" economies grow they are not yet large enough to generate sufficent growth to totally offset the US slowdown so global growth will likely slow as well. But we will see food inflation with drought in Russia and Australia and global grain stocks at mullti-year lows....

 

cheers

Zorro

[Zorrofan]

Here are a few comments from my favorite bear....

 

David Rosenberg rains on the bull parade and explains why the employment report was more bearish than the market response:

 

But there were many other parts of the nonfarm report that left much to be desired.  Here’s an unlucky seven examples of softness beneath the surface:

 

1.  Aggregate hours worked were flat.

 

2.  All the employment gains were part-time — full-time employment, as per the Household Survey, plunged 254,000.

 

3.  Those working part-time for “economic reasons” surged 331,000 — the biggest increase in six months.

 

4. While private payrolls were better than expected, 10,000 of that +67,000 tally reflected returning construction workers who had been on strike.

 

5. Manufacturing employment was down 27,000 and total goods producing jobs were flat — hardly signs of a robust economic backdrop.

 

6.  The diffusion index for private payrolls actually fell to 53.0 from 56.7 in July — a seven-month low.  It was 68.0 at the April high, which is consistent with an economy slowing down to stall-speed.

 

7.  The labour market gap widened with the all-inclusive U6 unemployment rate rising to a four-month high of 16.7% from 16.5% in July.  This is why the odds are stacked against a sustained acceleration in wages.

 

Source: Gluskin Sheff

 

cheers

Zorro

[Guest broxburnboy]

I can feel the food inflation..I bought panini buns for $0.69 per bun last week (I didn t look at the price, then too embarassed to return)

 

Are there any investment ideas based on food inflation. Who will do well? Farmers. Wil grocers? Will they be able to pass along price increases to customers?

 

Has anyone looked at NWF.un on TSE- I think probably close fully valued now- I thought it had a moat with most of their stores in rural areas -provider of food, general merchandise to small rural communities-often not many alternatives- Large box competitors are several hour drive away. Customers supported by various government programs.

 

 

I was reminded by a farmer friend that the cost of the wheat in your bun is only about 2 cents. The plastic bag around a loaf of bread costs more than the wheat. So the inflation attached to your bun has more to do with rising energy costs, labour, transportation, and profit.

[goldfinger]

Expectations and reality are two different things: how many economic expectations have been completely shattered in the last few years?

Has China become a consumer economy, can it buy its own products? As far as I know we are far from that point and some really weird phenomena can be observed in China at this point (home affordability in main urban areas for example, or oversupply of office space and even commodities in many places there, etc, etc, etc...). The chinese government has clearly stimulated like there is no tomorrow in the last two years. The jury is still out. By the same token, numbers coming out of BRIC countries cannot be fully trusted. The notion that countries that were growing their economies thanks to the consumption of the west can now pick up the slack is funny at best and sounds like the product of the denial of minds facing painful realities...

 

Moreover the EU and Japan need to be taken into consideration (EU itself is bigger that the US) and they are in even worse shape than the US.

[Smazz]

The emerging markets are growing slower than in previous years and though they are growing, they couldnt stop this repression we are in.

India is not a high income per capita economy and China, well, China I trust as far as I can throw Russia. :D

 

BTW, we were never in a double dip because we never got out of the first recession... why cant people get their heads around that?  The uptick was basically a result of the economic stimulus so truley that is not getting out of a recession - thats just stealing from Peter to give to Paul.

[goldfinger]

why cant people get their heads around that

 

Because people are afraid of change and afraid of the unknown because the mind is afraid of dying... humans are creatures of habit.

A prolonged "great recession" may mean what nobody wants: irreversible change in people's lives and in society; it may mean that something deeper is happening. Also we do not really know how to address the issue. Unconsciously people know that. Denial feels better. Ideology feels better.

Our economic theories do not provide the background to analyze and understand all that; they forgot the human factor among other things.

Free thinkers and others with reputations to defend and who believe that the problem is that bad cannot always speak the truth: it will attract the wrath of others. Looking at Achuthan sugar coating the conclusions that can be taken from persistent negative ECRI numbers in the last few months is funny to observe... he almost has to apologize for being an implicit messenger and cannot afford one misstep. Let alone those who dare evoking the possibility of a depression: they can only be irrational nutsos. Human nature really hasn't changed in the last few thousand years.

[Zorrofan]

Your comment about fear is really quite interesting. It may help explain why the market in general seems to be desperate for good news and is always looking at the smallest bit of a silver lining and not the big picture. For example, comments on the latest jobs numbers - jobs are still down but the market instead goes "it only down 50,000 not the 100,000 that was predicted". The ERCI weekly leading - IIRC - has never been this low, for this long, without a downturn in the economy. The next few quarters may be quite interesting...

 

cheers

Zorro

[goldfinger]

Exactly Zorrofan, exactly. The press which in my life time was always enjoying (and over reporting) bad news to increase sales is now desperately looking for good news to report: I think it is telling a lot about the real situation and also that the game might be rigged a little. Never in my lifetime have I seen such denial, never...