16 Nov 2021

Two staples go their own way. Over the last year and a bit wheat prices have risen more than 30% and rice prices have dropped more than 25%. For those commodity traders out there, great trending waves to have caught. I unfortunately missed both.

Norways exports rose more than 60% in October due largely to the spike in natural gas prices.

China’s Industrial Output and Retail sales grew more quickly than expected in October. This is in contrast to the official PMI which showed October as the second month in decline.

Janet Yellen is blaming inflation entirely on the COVID-19 pandemic. This is partly true but how psychologically flawed are these states(wo)man. We all know that inflation is caused by too much money chasing too few goods. I think Janet needs to confront her easy money demons as the head of the Fed.

You ever wonder what inflation does to the stock market. It turns out it is usually pretty good.

On the back of a chart I shared yesterday with Gross leverage at or near all time highs, we now have hedge funds grossing out. For three straight weeks throughout earnings. Net exposure among US HFs is only in the 47th %-ile in the past 12 months. The average US L/S HF is +8.5% YTD vs. SPX +25.2% (MS Prime Brokerage).

I hate surprises, I am not sure why people were so surprised.

Drilling in a little deeper thanks to JP Morgan. Goods inflation is running hot, not quite backed up by services. Let’s see if this has legs once we get a few months further out from Covid lockdowns. I am however keeping a watchful eye on China as I believe more regions are locking down to increasing Covid outbreaks. China is trying to go for eradication before the Winter Olympics in February. This strategy may prove costly on the economic front for its local economy and of course will send supply chain shock waves throughout the rest of the world.

I am not sure I fully get this, it simply seems like American’s don’t want to work. Jobs are opening up but the labour force participation rate is down on last year. I can only think people prefer not working and claiming welfare checks?

Just to amplify my point.

I guess what I am trying to say is that I am calling stagflation.

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