Noah, I feel like we are about to witness a BOOM in private and public investment with the goals of onshoring supply chains and decarbonization. Equiv. to a sort of war mobilization. How would that affect the 'stag' part? I'll assume bad for the 'flation' part b/c of ongoing (accelerating?) supply problems.
Do the 25% tariffs have nothing to do with inflation. Why tariffs on half the products from China but not the other half? The Democrats said Trump was a moron for tariffs on China but now it seems like a great idea with record inflation, I'm confused.
I think this article misrepresents the market for mRNA vaccines, and the reasons why China developed it own vaccine. The United States nationalized its vaccine industry and refused to sell mRNA vaccines, or any other type of Covid vaccine, outside America. Even Canada had to buy vaccine from Europe because the U.S. refused to sell. If Canada had problems buying vaccine from a close ally in the early days of the pandemic, I don't think China had much of a choice but to make their own.
I'm sure there are political reasons that China developed its own vaccine, but there is a practical reason too: if you are not an American citizen, you had better not depend on a company in the United States to supply your vaccines.
Actually, I think mRNA vaccines have been available around the world since they were first made. However, the vaccines were coming from European plants, not American ones. Once all Americans who wanted it were vaccinated, the U.S. started donating vaccines to the rest of the world. I am not sure if American plants are allowed to sell vaccine freely yet, or if the U.S. government is still buying all that is produced.
Pfizer was affected, at least in the early days. Canada received Pfizer vaccine from Belgium, not from Michigan. Fortunately, the EU did not stop exports of vaccines, or it would have been very bad for Canada. I'm not sure about the current situation. It is possible that American vaccine manufacturers are no longer forbidden to sell to non-Americans.
My outrage in all this is how the rules of trade change. I thought vaccine manufacturers were private companies that could sell to whoever they wanted; but the pandemic hit and some countries decided that these companies could not ship vaccine to foreigners.
I can see an argument either way about whether free trade in vaccines is a good idea. But Canada once had a large pharmaceutical industry that foreign companies bought, then moved production to larger plants in the U.S. and Europe. Canada looked like a sucker allowing companies to be bought, then being put at the back of the line when it came to Vaccine deliveries.
Your article is primarily about US inflation expectations. Is this also going to be a case of global inflation? How much can unilateral US actions control the effects of global inflation within the US? Might we need global action of some sort to control the global inflation?
One more thing: could you tell us a little about how such oil shocks could be prevented in the future? We've seen prices below zero, reductions in production, opening of the strategic oil preserve and who knows what else: I could appreciate a recap, explanation of how they work together, and how oil prices could be stabilized long term.
Whatever happened to the ZLB concerns and the arguments to increase the inflation target to 4%
Ppl act like the 2% target was bought down from Mt Sinai on stone tablets but it was chosen by men and we still don’t know for sure it’s the ideal target
In terms of breakevens, I wonder how much of that is actual inflation expectations vs market technicals. The TIPS market is small and the Fed owns ~20% of outstanding bonds. If we are gauging the market, watching the 10-year is important (saw a decent move up today). Also, looking at fwd curves, the market is actually pricing in a rate cut in 2024
For energy driven inflation, there isn't necessarily a good save haven. Energy is a consumable good and even energy companies might not turn bigger profits with higher energy prices. This is different from asset/monetary supply driven inflation like we have seen in the last 12 years, where if you owned stocks or real estate, which have inflated greatly, then you've benefitted from that inflation. In demand-side inflation, you just have to be working and producing the goods that are in demand or invested in those things in demand. With oil, gas, energy driven price increases, nothing is safe. You could never speculate on enough oil barrels to fight off inflation.
Noah, what is your view on the yield curve as a leading indicator of recession? The 2-10y spread has only had one false positive in 1965.
And have you read Foldvary's geo-Austrian synthesis? I'm guessing not since you're distinguishing recessions induced by the Fed from the real estate cycle, when they should be treated as two interrelated factors in the business cycle.
So in layman's terms: the next year or two might suck, but hopefully we'll come out of this with somewhat minimal damage for the everyday US citizen?
Hopefully.
Noah, I feel like we are about to witness a BOOM in private and public investment with the goals of onshoring supply chains and decarbonization. Equiv. to a sort of war mobilization. How would that affect the 'stag' part? I'll assume bad for the 'flation' part b/c of ongoing (accelerating?) supply problems.
Do the 25% tariffs have nothing to do with inflation. Why tariffs on half the products from China but not the other half? The Democrats said Trump was a moron for tariffs on China but now it seems like a great idea with record inflation, I'm confused.
I think this article misrepresents the market for mRNA vaccines, and the reasons why China developed it own vaccine. The United States nationalized its vaccine industry and refused to sell mRNA vaccines, or any other type of Covid vaccine, outside America. Even Canada had to buy vaccine from Europe because the U.S. refused to sell. If Canada had problems buying vaccine from a close ally in the early days of the pandemic, I don't think China had much of a choice but to make their own.
I'm sure there are political reasons that China developed its own vaccine, but there is a practical reason too: if you are not an American citizen, you had better not depend on a company in the United States to supply your vaccines.
That was certainly the case for the first half of 2021. But haven't mRNA vaccines been available around the world for the past few months?
Actually, I think mRNA vaccines have been available around the world since they were first made. However, the vaccines were coming from European plants, not American ones. Once all Americans who wanted it were vaccinated, the U.S. started donating vaccines to the rest of the world. I am not sure if American plants are allowed to sell vaccine freely yet, or if the U.S. government is still buying all that is produced.
Are you referring to the restrictions based on Operation Warp Speed? If so, then Pfizer wouldn't have been affected.
Pfizer was affected, at least in the early days. Canada received Pfizer vaccine from Belgium, not from Michigan. Fortunately, the EU did not stop exports of vaccines, or it would have been very bad for Canada. I'm not sure about the current situation. It is possible that American vaccine manufacturers are no longer forbidden to sell to non-Americans.
My outrage in all this is how the rules of trade change. I thought vaccine manufacturers were private companies that could sell to whoever they wanted; but the pandemic hit and some countries decided that these companies could not ship vaccine to foreigners.
I can see an argument either way about whether free trade in vaccines is a good idea. But Canada once had a large pharmaceutical industry that foreign companies bought, then moved production to larger plants in the U.S. and Europe. Canada looked like a sucker allowing companies to be bought, then being put at the back of the line when it came to Vaccine deliveries.
Your article is primarily about US inflation expectations. Is this also going to be a case of global inflation? How much can unilateral US actions control the effects of global inflation within the US? Might we need global action of some sort to control the global inflation?
One more thing: could you tell us a little about how such oil shocks could be prevented in the future? We've seen prices below zero, reductions in production, opening of the strategic oil preserve and who knows what else: I could appreciate a recap, explanation of how they work together, and how oil prices could be stabilized long term.
So inflation looks like it’s gonna be about 3.5%
Whatever happened to the ZLB concerns and the arguments to increase the inflation target to 4%
Ppl act like the 2% target was bought down from Mt Sinai on stone tablets but it was chosen by men and we still don’t know for sure it’s the ideal target
So why not start discussing the 4% target again?
In terms of breakevens, I wonder how much of that is actual inflation expectations vs market technicals. The TIPS market is small and the Fed owns ~20% of outstanding bonds. If we are gauging the market, watching the 10-year is important (saw a decent move up today). Also, looking at fwd curves, the market is actually pricing in a rate cut in 2024
O.S.B. is $43 a sheet. Can someone please talk about this?
What do you do with your cash savings then? Stocks?
Max out your series I savings bonds first.
By which I mean, stocks might normally protect vs inflation, but if theres a recession. Durable goods? Gold? Specific stocks domestic production?
For energy driven inflation, there isn't necessarily a good save haven. Energy is a consumable good and even energy companies might not turn bigger profits with higher energy prices. This is different from asset/monetary supply driven inflation like we have seen in the last 12 years, where if you owned stocks or real estate, which have inflated greatly, then you've benefitted from that inflation. In demand-side inflation, you just have to be working and producing the goods that are in demand or invested in those things in demand. With oil, gas, energy driven price increases, nothing is safe. You could never speculate on enough oil barrels to fight off inflation.
Noah, what is your view on the yield curve as a leading indicator of recession? The 2-10y spread has only had one false positive in 1965.
And have you read Foldvary's geo-Austrian synthesis? I'm guessing not since you're distinguishing recessions induced by the Fed from the real estate cycle, when they should be treated as two interrelated factors in the business cycle.
It's not going to end well.
https://nakedemperor.substack.com/p/global-food-crisis?s=w
2024 is a long ways away. By then, WWIII might be full blown.