The Kellogg’s Crispix Indicator Of Inflation (UUP)
by ilene - October 31st, 2010 12:41 pm
The Kellogg’s Crispix Indicator Of Inflation (UUP)
Courtesy of Sellputs at Hedge Accordingly
My favorite cereal is Kellogg’s Crispix. The cereal is very simple not to sugary not to bland. Lately my box’s of Crispix seem to be getting smaller while theprice is ever increasing? I thought i was a bit crazy and obsessive though i realized i am not, the price of Crispix seems to be going up nearly 50c every 6 months. Perhaps this is the grocery store marking up products… Doubt it. What really happening is the most basic form of inflation, via the price of commodities including but not limited to grains/corn/oil rising.
A normal size box of cereal advertised as a "low price" (above picture) is priced at $4.50 a box, some cereals were over $5.00 a box. Seriously, $5 dollars a box?
Milk is only 2.50 a gallon, which usually outlaststhe cereal in most households with kids. maybe…
Moral of the story, if QEII is implemented we could be seeing $6.00 box’s of Crispix and im gonna be fairly pissed off… but seriously teach this to your kids, tell them to make a game of it marking the prices of their favorite cereals on a graph.
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DiggWatch The Political Central Planners: We’re Doomed
by Zero Hedge - October 31st, 2010 12:38 pm
Courtesy of mikla
Mish posted a reference to a “Simulation of a US State Defaulting” video for a panel of “luminaries” at the Buttonwood gathering in New York. These are our leaders: From officials in the Bush and Clinton administration, these are the “top” people that were in positions to decide such things, including Robert Rubin, Josh Bolten, Glenn Hubbard, Laurence Meyer, and Laura Tyson.
In their advisory role to the President, including roles representing the US Treasury and the Federal Reserve, they discussed for a couple hours what to recommend to the President regarding assistance to the fictional US State of New Jefferson that will be unable to make a $1.5B municipal bond payment in 48 hours.
Long story short: I watched the whole thing. The entire video. A couple hours. I am now faced with the irksome question as to whether a “well adjusted” person would act out aggression upon himself or upon those around him.
Summary: Although the scenario at times had bits of interesting dynamics (if you’re interested in back-room discussion as to what happens in such meetings), after you lose a couple hours of your life watching them banter, they decided to recommend to the President (a fictional female in this scenario) that the US Treasury extend a 30-day loan to the fictional state of New Jefferson in exchange for the state promising to be good in the future, and possibly cede sovereignty to the Federal Government.
My conclusions:
- After significant preparation time for this scenario, it is clear they did not have mastery of the situation dynamics, liabilities, and issues. They sure seem to love the process, though, and the only thing missing from the meeting were delectable snacks.
- It is easy to conclude none of these persons are geniuses. While geniuses are rare, they exist; unfortunately, everyone on the panel ranks somewhere between Cliff Clavin and Doctor Nick.
- While this simulation is fictional, the panelists are not. These are your actual political and executive central planners, at work for all to see.
- None of the individuals fundamentally understand the problem, and no “actual” solution was proposed, nor even discussed, nor even raised as a possible topic.
- We’re doomed.
The ZH readership includes healthy groups of individuals that debate whether these financial crises are “planned”, or are mere consequences from permitting us all…
Gonzalo Lira’s Redux On Signs Of An Upcoming Hyperinflation
by Zero Hedge - October 31st, 2010 12:23 pm
Courtesy of Tyler Durden
Submitted by Gonzalo Lira
Signs Hyperinflation Is Arriving
This post is gonna be short and sweet—and scary:
Back in late August, I argued that hyperinflation would be triggered by a run on Treasury bonds. I described how such a run might happen, and argued that if Treasuries were no longer considered safe, then commodities would become the store of value.
Such a run on commodities, I further argued, would inevitably lead to price increases and a rise in the Consumer Price Index, which would initially be interpreted by the Federal Reserve, the Federal government, as well as the commentariat, as a good thing: A sign that “the economy is recovering”, a sign that “normalcy” was returning.
I argued that—far from being “a sign of recovery”—rising CPI would be the sign that things were about to get ugly.
I concluded that, like the stagflation of ‘79, inflation would rise to the double digits relatively quickly. However, unlike in 1980, when Paul Volcker raised interest rates severely in order to halt inflation, in today’s weakened macro-economic environment, that remedy is simply not available to Ben Bernanke.
Therefore, I predicted that inflation would spiral out of control, and turn into hyperinflation of the U.S. dollar.
A lot of people claimed I was on drugs when I wrote this.
Now? Not so much.
In my initial argument, I was sure that there would come a moment when Treasury bond holders would realize that they are the New & Improved Toxic Asset—as everyone knows, there is no way the U.S. Federal government can pay the outstanding debt it has: It’s simply too big.
So I assumed that, when the market collectively realized this, there would be a panic in Treasuries. This panic, of course, would lead to the spike in commodities.
However, I am no longer certain if there will ever be such a panic in Treasuries. Backstop Benny has been so adroit at propping up Treasuries and keeping their yields low, the Stealth Monetization has been so effective, the TBTF banks’ arbitrage trade between the Fed’s liquidity windows and Treasury bond yields has been so lucrative, and the bond market itself is so aware that…
My Vote
by Zero Hedge - October 31st, 2010 12:01 pm
Courtesy of Bruce Krasting
If you give money to candidates the amount and beneficiary are made public. If you look me up you would see that I have contributed to Democratic candidates on a regular basis for a long time. Not this year. As a long time Dem, it is hard for me to describe my disappointment. There is very little that I can look to over the past two years and say, “They got this one right”. So this year I am going to vote with my feet. I think people like me are key to this election.
I live in Westchester county NY. This is the 19th Congressional District. There is a lot on the ballot this year including a local plan to raise taxes and create a “reserve fund.” I will most certainly be voting against the latter. I have come to learn that “rainy day funds” get spent at the first sign of clouds.
The NY story is not so important. This is a Blue state and even with the lousy governance the Empire State will remain blue. But I think the Wednesday morning look will show that NY has gone decidedly in the direction of purple.
For Governor we have Andrew Cuomo versus Carl Paladino. Cuomo will win handily. Paladino is an upstate Pol who has no credentials to be Governor. He has threatened news reporters with violence and made a number of blunders. He said NY’s junior Senator Kirsten Gillibrand, “is Schumer’s “little girl”. That went over big. Carl’s only contributions so far has been is his slogan, “I’m mad too”. Well I am mad and I am voting for Carl. Andrew Cuomo will be NY’s next governor, but the mandate he thinks he will get will fall much shorter than is expected.
Chuck Schumer and Gillibrand will be returned to the Senate. Chuck is an ass but he is so connected that he can’t be beat. Gillibrand is running against a no-name and will coat tail herself to another term in the Senate. I’m voting for the opposition. The hell with the “ins“.
My vote will likely decide the Congressional race where I live. The incumbent, John Hall, was voted in (thanks in small part to me) in 1998 when the anti Bush sentiment was racing. He was re-elected in 2000. He is a…
Hit And Run Trades Give Good Profits
by Chart School - October 31st, 2010 12:01 pm
Hit And Run Trades Give Good Profits
Elections, QE2. Do news driven events like this matter?
From a technical standpoint they don’t. Although those events are most likely going to get us unstuck from the current trajectory of our current trend channel.
If we are going higher, we need to break 1195.
If we are going lower we need to break trend channel support as shown in the short term index charts below.
Short term, the markets are at trend line support. The big question is whether the trend line support will hold. IF so, then the next barrier is 1195. If we can get through that, then it’s a retest of the 1220 highs. But watch out for a retest of 1195 and failure.
IF we are going lower, then how far and what should we be watching for right? If you look at the chart below, you’ll see numerous levels of technical support.
We’ve got the neckline (long blue line) of the head and shoulders bottom which also just happens to be the 50 day average and one could say spitting distance away from the 200 day average as well. Then we’ve got the little blue line as another support level to contend with as well. These are all serious levels of technical support that initially will be defended. So we say bring it on!
It may be a huge opportunity on the long side for an into the end of the year push in the indexes. So if the markets get slammed to the technical levels mentioned above, GREAT as we’ll be ready for it with leading stocks to buy. THAT is where the big trades between now and year end are going to come from on the long side.
Better to be aware of it now and be prepared in advance so when and if it occurs, that’s where you can play catch up and make your whole year if you play it right. In the meantime, we’ll pick off a few here and there and wait for big trades to come our way.
We are in the middle of the road on the indexes and in an uptrend, albeit an accelerated one with very small consolidations along the way. By the way, those little consolidations in a sell off in the market will get cut like
…
The Apple Event Horizon
by Zero Hedge - October 31st, 2010 4:34 am
Courtesy of williambanzai7
Yesterday, I noticed two Mac-news items that caught my attention.
First there was this iPhone news:
Despite an Android onslaught, ‘antenna-gate’ and ‘glass-gate’, Apple has managed to design its way into the top five handset makers for the first time, bouncing Sony Ericcson out of the game as the Cupertino firm enjoys growing mind-share.
This news is confirmed in a pair of reports from Strategy Analytics and IDC, with the former report crossing the wires at 10pm Eastern last night. Strategy Analytics estimate 327 million handsets were shipped worldwide in Q3 2010, growing 13 percent from a year earlier.
Analyst Neil Mawston notes, “Apple was the star performer, as it jumped into the top five rankings for the first time.” [Source: Computerworld's Apple Holic Blog]
Then there was an editorial in Information Age titled, Microsoft Looking Like an End Stage Company wherein the author says:
“I believe that Microsoft as we know it may not be around in another decade--maybe not even in five years. There’s hardly a single tech industry trend line pointing in Redmond’s favor right now, and some of those curves are about to get a lot steeper, real fast.
So it’s hardly surprising recent Microsoft-related news has been pretty much on par with where things stand for the company these days—mostly all bad.”
This reported and said during the same week that Apple introduced what some are calling yet another Apple “game changer,” the latest MacBook Air.
Before I continue, I have this important disclosure/confession to make: I do not own any shares of AAPL. However, I do own 4 Apple computers, an iPad, numerous iPod devices, an iPhone (1st generation, hey if it still works why trade if you don’t care about phone envy?) and an Airport Extreme. All of this hardware remains fully operational and is lit up on a regular basis. On the rare occasion when I have had a problem, my hardware has been repaired or replaced within five business days. I have one Windows powered laptop which I have loaned out indefinitely. I don’t have a…
Why The Downside To The Fed’s “All In” Attempt To Spike Shadow Monetary Velocity Is A $4.5 Trillion Drop In GDP (And The “Upside” Is Hyperinflation)
by Zero Hedge - October 30th, 2010 11:15 pm
Courtesy of Tyler Durden
It appears that the one topic pundits have the most problems grasping is the spread between the segregation of traditional and shadow monetary aggregates, overall economic deleveraging and aggregate monetary velocity, and how all that impacts GDP. A summary which confirms just how prevalent the confusion is, is this terrific post by the Kalafia Beach Pundit, terrific not because it is even remotely correct (the post is so blatantly wrong – one wonders if Western Asset Management even expects its current and former asset managers to count beyond 2… M2 that is), but because it demonstrates how self-professed “pundits”, whether of the beach variety or not, don’t have the faintest grasp of more than merely trivial monetary topics.
The basis for the above-mentioned post’s argument is that since M2 is growing (which it is for 16 weeks in a row now as we have been pointing out repeatedly), and since M2 velocity has performed a dead cat bounce off its 30 year lows following the complete collapse in M2 velocity after the bankruptcy of Lehman, that GDP has to grow. Period. This argument is so flawed and so one-sided, that its refutation and subsequent elaboration as to what reality truly is, is what this post was at first all about. Yet in refuting the simplistic conclusion of a mainstream pundit’s myopic perspective, we uncover something far more troubling: namely that should the Fed fail in stoking consolidated aggregate monetary velocity very quickly, as the shadow liability collapse accelerates, US GDP has the potential to drop by up to $4.5 trillion over the next 3 years.
First, looking at M2, it is indeed the case that M2 has been growing. As the chart below shows, since the beginning of 2010, M2 has grown by $288.7 billion from $8485 to $8773 billion.
The problem, as Zero Hedge readers know all too well, is that M2 is merely a small subcomponent of all practical monetary aggregates, including those derived from the shadow credit system. As the beach pundit certainly should be aware, a far more important aggregate is M3, which the Fed has conveniently decided to eliminate, just so those of the permabullish persuasion can spin factless arguments using the far more easily manipulable M2 as a proxy for money demand. And looking beyond M2 is precisely where the entire argument falls…
Hit And Run Trades Give Good Profits
by Chart School - October 30th, 2010 10:12 pm
Courtesy of David Grandey
Elections, QE2. Do news driven events like this matter?
From a technical standpoint they don’t. Although those events are most likely going to get us unstuck from the current trajectory of our current trend channel that we will say.
If we are going higher then we need to break 1195.
If we are going lower we need to break trend channel support as shown in the short term index charts below.
Short term, the markets are at trend line support and that is holding for the time being. The big question is will trend line support hold. IF so then the next barrier is 1195. If we can get through that then it’s a retest of the 1220 highs. But watch out for a retest of 1195 and failure as that would fall into the realm of nice uptrend, puts in a double top and see ya later to the downside. That is your what to watch out for next week.
All of which leads us to IF we are going lower. If so then how far and what should we be watching for right? We mean after all inquiring minds want to know. Well if you look at the chart below you’ll see numerous levels of technical supports.
We’ve got the neckline (long blue line) of the head and shoulders bottom which also just happens to be the 50 day average and one could say spitting distance away from the 200 day average as well. Then we’ve got the little blue line as another support level to contend with as well. These are all serious levels of technical support that initially will be defended. So we say bring it on!
Should that happen it’s a huge opportunity on the long side for an into the end of the year push in the indexes. So if the markets get slammed to the technical levels mentioned above? GREAT as we’ll be ready for it with leading stocks to buy in the face of fear mind you. THAT is where the big trades between now and year end are going to come from on the long side.
Better to be aware of it now and be prepared in advance so when and if it occurs that’s where you can play catch up and make your whole year if you…
Cardano’s Gambit
by ilene - October 30th, 2010 9:53 pm
Cardano’s Gambit
Courtesy of Tim at The Psy-Fi Blog
Gamblers ‘Nonymous
Investing is, up to a point, gambling. Most of us don’t think of it in that way but if we conceive of the universe of stocks as a gas of randomly moving particles buffeted this way and that by forces largely beyond their – and certainly beyond our – control then there’s no other conclusion that can be drawn.
However, we don’t really believe this. What we generally believe is that although randomness is pervasive in stocks there’s a pattern that lies beneath the surface which we, in spite all evidence to the contrary, can pick out. For the idea that there are repeatable patterns hidden within apparently random games of chance we can thank one of our more unlikely heroes. Meet Girolamo Cardano, medieval physician, professional gambler and mathematician extraordinaire.
God’s Will
For a very long time in human history there was no appreciation or investigation of probability, the mathematics that lies behind assessments of risk. For the most part people didn’t believe in chance: stuff happened and that was God’s will. The idea that there was some order in the chaos either seems not to have occurred or to have been literally unthinkable.
Gamblers, however, did have some vague understanding that there were patterns in the randomness and quite a lot of self-interest in figuring these out. It’s no surprise that gambling figures quite large in early accounts of advances in probability theory. In Cardano, who seems to have been addicted to gambling, the will to understand and the ability to do so came together.
Elementary Probability
In many ways what Cardano figured out is today regarded as almost trivial, but at the time it was revolutionary and it allowed him an insight into why and when he should take a risk and when he shouldn’t. Perhaps the simplest example is to do with dice. At the time it was regarded as a bit of a mystery why, when three dice were rolled, the sum of face-up numbers came to ten more often than nine, despite the fact that there were six ways of summing possible numbers to both.
The answer to this conundrum is almost childishly simple to our eyes. There are twenty seven ways of combining the possible sums to ten while there are only…
Look Out Below Part 2
by Chart School - October 30th, 2010 9:23 pm
Look Out Below Part 2
Courtesy of Charles Hugh Smith, Of Two Minds
The U.S. stock market is looking vulnerable to buyer’s remorse.
Even those of you who don’t enjoy charts will see the signs of an exhausted market just waiting for the sell signal from the Powers That Be to roll over. Standard-issue financial pundits forget that "surprising" declines benefit those same select hands which kept the market lofting higher the past few months as volume (i.e. broad-based appetite for equities) declined.
The easiest way to make large profits is to go short when everyone else has been lulled into complacency/mild bullishness, then engineer a sharp downturn that triggers stops all the way down. Once the complacency has been replaced by fear and angst, then scoop up shares which have been discounted.
Rinse and repeat.
This is not investment advice (please see the HUGE GIANT BIG FAT DISCLAIMER below) but is that a voice crying "Look out below!" I hear? Previous entries on the same topic:
Look Out Below (I’ve got a bad feeling about this)
(October 8, 2010)
The Stock Market’s Long Decline Has Begun
(October 20, 2010)
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