My Life As a Useful Idiot

 

nadiathemis.com

I can summarize my working life as nothing more than being a useful idiot. Being retired means I am no longer useful, which just leaves being an idiot... so you are forewarned about anything I say or do. 

If you are not on top of the pile, you are likely someone's useful idiot. Along the way, you rationalize the changes you have made in your values... just to get ahead. 

At one point in my life, I was informed my clothing was THE reason I got a raise at the lower end of the spectrum. After a year of buying fashionable clothing and looking stellar all the time... I got a raise at the upper end of the spectrum. The dollar difference did not make up for the pricier clothing.

But as Shakespeare said, "The apparel oft proclaims the man," except Shakespeare was a playwright and he was writing the dialogue of Polonius. Simply put... books are generally judged by their cover. Polonius also stated, "To thine own self be true." Take care of yourself and your affairs above all else", was the intended meaning. 

Most people take the above quite literally and dress for success, while climbing the ladder at the expense of others. Office politics takes control over individual values. Your version of right v wrong, gets distorted on the way up the ladder.

While I got off the ladder by retiring, I do see how some people might get angry when they are thrown off the ladder. They would rationalize this occurrence by shifting blame to those remaining on the ladder. The truth is in their own failure to adjust to the politics of the ladder... or being a valued useful idiot. 

It is likely that none of this makes sense, but I would suggest some soul searching about how you own values have changed over the years... and why.

Good Luck!!

End of the Month... March 2022 PCE, Advance GDP, and Other Stuff.

With the PCE index report this morning, we can wrap up all the March inflation numbers. Granted, some slight improvement was seen in some areas, but still double digit increases on the upstream models seem to suggest more inflation to the consumer.

As mentioned last month, the core seems to be decelerating and the potential for further decreases appear on the horizon. A lot depends on China's current covid lockdowns and impact on the supply chain.

We also see the personal income and outlays for March. Note the current dollars and chained dollars. Chained dollars are only used in a couple of categories. So thrown in inflation and the numbers aren't exactly rosy.

Yesterday the GDP Advance 2022 1st quarter was released and failed to live up to expectations. Quite a bit was made about Consumers still lifting the economy and the trade gap really stifling the numbers. As for the consumers, the bulk of that lift was in the service sector as the goods sector was flat. The Services was up 1.0% quarter to quarter and the trade gap was down 1.4% quarter to quarter. Outside of those two, everything else was tepid, imo. Although Non-Residential Fixed Investment was 2.2% above previous quarter. 

One quarter does not a recession make, so the numbers could significantly change as more data becomes available. 

Of course, the books are now closing for March, and it is on to April numbers. So, the impact of China's covid shutdown policies will become evident real soon, the "official" impact won't begin to be known until June. 

As for consumer inflation for April, I would tend to believe that energy would be flat from March. Don't be misled, as gasoline appears to be edging up at this writing as well as Natural Gas. Core inflation might be decelerating a bit, but food does not appear to be decelerating. Overall, the CPI should "cool" to near 8.0%. Welcome to the late 70s and early 80s of last century.

The U.S. should once again become a net exporter, for the year, of Petroleum and Petroleum Products over the next few weeks, as the exports have ballooned to nearly a 1-million-barrel net exports on a daily average. That million-barrel daily release from the SPR is slated to begin May 1st.

Oh well, this is "fun" times we live in!

Other Stuff...

It amazes me in this day and age... how utterly devoid of knowledge, we Americans have become. Although I can find numerous instances where we are not alone in knowledge deficit.

A near direct quote "Our politicians are always promising to fund infrastructure, yet here we are in 2022 and they have done nothing", which is greeted with broad agreement. Apparently we must all forget Congress passing a $1.4 Trillion infrastructure bill and the President signing it on November 15, 2021.

Usually during this conversation, someone will mention that Trillion Dollar shovel ready infrastructure bill signed by Obama in 2009... and ask what ever happened to that? It never existed. There was a $787 billion stimulus bill, which included about $98 billion for infrastructure, of which a portion was for shovel ready.

We have become equally adept at ignoring stuff that happens and making up stuff that didn't happen.

There really is no hope, so why bother? Everyone slows down to see a car crash or a train wreck or any number of other such things. 

Lipstick on a Pig!!

I recently read an article on a widely read news website that stated a 8.5%+ increase in Social Security was in the offing for 2023. It cited a certain "non-partisan" research firm. 

Whoa... "non-partisan" is quite a tube of lipstick. Overlooking the shady history of this organization, it was clearly a political hit piece, intended to plant an idea in the public's thought process in an election year. 

While it might be possible, there is nothing in the tea leaves to suggest such an increase. The current suggestions indicate a range of 5.9%~6.2%. No doubt the beneficiaries of this increase will harken back to the 8.5%+ number and claim they have been cheated by the politicians in power. 

For that 8.5%+ to continue until the July ~ September time frame, would require something above 0.7% monthly increases through September. Supply v Demand is already indicating a drop off in demand for Gasoline, although Crude supplies are short. Food demand will not drop off, with supplies tightening. Almost all other items are beginning to stabilize. 

Let's face it... such an inflation rate necessary to hit the 8.5%+ YOY increase for 3rd Qtr. would likely send us into some type of recession.

I, also, have been reading about how NATO is so much stronger now, with the Russian invasion of Ukraine. If anything, the weaknesses are more visible. If someone were to attack a NATO country, the NATO council would require “consensus” for official involvement. Not likely and would end up with something akin to a “coalition of the willing.”

Such an action would likely result in the halting of energy supplies to Europe, which would result in widespread economic consequences. THAT would be blamed on the good old USA… not Putin.

Of course, it would be a false premise, but the USA should be used to being blamed for everything wrong in the world. Of course, the USA has made more than a few mistakes, but not 100% of everything. But being the leader of anything comes with intense scrutiny and blame… every time something goes wrong. Which overshadows any accomplishments.

Which brings me to the subject of Germany, the leader of the EU. A seismic shift has taken place inside the country’s political objectives regarding Russia. Early on the dialogue was about his 180° turn and the self-reflection of previous policies.

Now it seems the criticism of Germany is causing the politicos to sound alarms about the “unfairness” of such criticisms. Some is deserved and some… maybe not. When times get tough, it is not uncommon to blame the leaders and Germany is a leader. It comes with the territory.

German policies have created the potential for a huge mess, but most of the EU followed along and reaped the benefits. Faced with adversity… a scapegoat is needed. But they shouldn’t worry too much, as eventually this will all be blamed on U.S. policies, whether due to inaction, over-reaction, meddling, etc. After all, most of the world blames the U.S. for Russia being forced to invade Ukraine.

Confusing Statements, Ideas and downright lies!!!

Where to start? I just read someone claiming to be an geopolitical expert... state that Russia is landlocked and this was one of the reasons for Russia seeking control of Ukraine. GEE OH!! Get a map for pete's sake. Or possibly St. Petersburg's sake as it is a saltwater port from May through December (not frozen in). I will lightly mention Murmansk, which is ice free year round and lies above the arctic circle.

Then we have the Sea of Azov, where Mariupol is located. To transit the Sea of Azov into the Black Sea means passing through the Kerch Strait, which is controlled on both sides by Russia. Once into the Black sea, passage through the Bosporus and  Dardanelles is needed. WOW!!

A lot of virtue signaling. A lot of countries are welcoming Ukrainians with open arms and little to no paperwork. This is really a grand thing, but most of the refugees are women and children. Are we simply ignoring they may wish to sometime return to Ukraine? Or are we simply ignoring the horrible truth of the men's survival rate and likelihood of a destroyed Ukraine for generations to come?

I am not even venturing into the racial aspects, which should also be questioned. Apparently there are estimates of some 26 million refugees worldwide, yet... never mind. 

I keep hearing how cutting off Russian oil and natural gas would bring Putin to his knees. Apparently the inconvenience that might cause some European countries is to great a cost to bear... even when factoring in Ukrainian lives.

I've been reading reports of the China lockdown being so severe... that farmers plowing their fields are being arrested for not staying in lockdown. Then there are reports that nearly 400 million are in lockdown. Let's hope the number is way south of that, as the global economic disruption would be HUGE! 

It's been a long time since I bothered with forex, but there is something weird going on. Maybe it was always this way and I have forgotten. 

I may edit this with some more information, as I see fit.

Retail Trade Report for March 2022

 

The Census Bureau has released the ADVANCE MONTHLY SALES FOR RETAIL AND FOOD SERVICES, MARCH 2022. 

Advance estimates of U.S. retail and food services sales for March 2022, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $665.7 billion, an increase of 0.5 percent (±0.5 percent)* from the previous month, and 6.9 percent (±0.9 percent) above March 2021.

Total sales for the January 2022 through March 2022 period were up 12.9 percent (±0.7 percent) from the same period a year ago. The January 2022 to February 2022 percent change was revised from up 0.3 percent (±0.5 percent)* to up 0.8 percent (±0.2 percent).

Retail trade sales were up 0.4 percent (±0.4 percent)* from February 2022, and up 5.5 percent (±0.7 percent) above last year. Gasoline stations were up 37.0 percent (±1.8 percent) from March 2021, while food services and drinking places were up 19.4 percent (±4.6 percent) from last year.

I factor in the stuff bought based on the flat rate of inflation, without breaking out into various components. However, the bottom line should not be too far off. We are spending more for less. If you weren't already aware of that... shame on you.

For those interested in a bit more information...

The March 2022 Advance Monthly Sales for Retail Trade and Food Services report was released on April 14, 2022 at 8:30 a.m., and available as:

• Full Publication in Excel [78KB] | PDF [611KB] (Excel download)

A snapshot... 

• The "no shocker" category would be gasoline being up month to month and year over year. 
• Restaurants and drinking places, while up year to year... were flat from February.
• Automotive was down both year to year and from previous month.
• Electronic and appliance stores experienced an uptick from last month, although down from year ago levels.

The stuff bought appears to be sliding and I have to wonder if/when inflation might be curbed... due to demand destruction. Retail prices to the consumer are still rising; Producer prices to the retailers are still rising; and inputs to produce prices are still rising.

The really smart people indicate the inflation has peaked, but that simply means in the 8.0% range. These really smart people are starting to indicate demand destruction around early summer and continuing into late fall.

Of course these really smart people are sometimes wrong... just not as often as me. To clarify... that would be under 4% annual rate of inflation by Christmas. YeeHaw!!

Producer Price Index for March 2022

 

The Producer Price Index as released by the BLS, this A.M. 

The Producer Price Index for final demand increased 1.4 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed advances of 0.9 percent in February and 1.2 percent in January. (See table A.) On an unadjusted basis, final demand prices moved up 11.2 percent for the 12 months ended in March, the largest increase since 12-month data were first calculated in November 2010.

I wish I could see a silver lining, but with the input costs remaining above the demand stage levels... hard to do.

Supply chain and harbor congestion. It would appear the west coast congestion is easing, but it also appears the backlog has been shifted to east and gulf coast regions. Intermodal is still struggling with congestion and we all have heard the dire warnings of truck driver shortages. 

I can't help but think that just-in-time is dead and has been replaced by just-in-case. Which would mean a whole lot of inventory build-up staring into the potential abyss of consumer pullback in purchasing.

A better view of that, might come with tomorrow's advance retail sales outlook... which will contain numerous revisions.

Breakdown of CPI DATA and Real Earnings, March 2022

 

The BLS report for March...

The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.2 percent in March on a seasonally adjusted basis after rising 0.8 percent in February, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.5 percent before seasonal adjustment.

From last Month...  

The forecast for March is a bit blurry, due to energy prices, but the expectations would be 8.2% ~ 9.1%. I would unhappily lean towards the 8.7% range, just based on the rapid rise of gasoline during this month, although it may be peaking as I type. I would expect the upward trend in food prices to continue. 

With this release comes a variety of other numbers...

I am unhappily at 6.4%...

Like many, my food inflation is creeping up. I am able to stay below the headline number, due to some things I don't do. I don't buy a new car, so that 12.5% inflation does not impact me. I do estimate the replacement of my used car, but I would not purchase a used car outright. So I adjust the difference with a trade in... which oddly sees my trade in value also increasing, albeit not as fast as the used vehicle to be purchased. But still the inflation rate is significantly lower than 35.3%.

I should also mention that health costs have thus far inflated at a much lower rate, which still worries me. Hopefully I don't become sick with worry.

On to earnings report... (REAL means over and above inflation... or sometimes below)

This is the 3rd straight month of declines, with it nearly back to February 2020 levels. (Note, I have not adjusted all the adjustment the BLS has made... so it may be more.)

The 4th consecutive month of declines in weekly wages. 

Going forward, it is getting even harder to forecast inflation, as several variables are at play. It would appear that many consumables are starting to slow, which would indicate a potential for slowing of inflation in that area. But then again, China is in lockdown in so many places that further supply disruptions are possible.

Gasoline costs may abate, but likely due to decreased demand and the aforementioned China slowdown. 

Food is the one area that will continue to see inflation, as all manner of issues are arising. 

I can fairly confidently (and sadly) state that April numbers due out in May, will likely be north of 8.0%, such as between 8.0% and 8.5%. 

EDIT: just hours after writing this, the Chinese are loosening the lockdown and crude and gasoline prices have taken off. We'll see where this leads.