Wal-Mart US CEO To America: "Prepare For Serious Inflation"

Tyler Durden's picture

To those who think that buying food in the corner deli is becoming a luxury, we have five words: you ain't seen nuthin' yet. U.S. consumers face "serious" inflation in the months ahead for
clothing, food and other products, the head of Wal-Mart's U.S.
operations warned Wednesday talking to USA Today. And if Wal-Mart which is at the very bottom of commoditized consumer retail, and at the very peak of avoiding reexporting of US inflation by way of China is concerned, it may be time to panic, or at least cancel those plane tickets to Zimbabwe, which is soon coming to us.

The world's largest retailer is working with suppliers to minimize the effect of cost increases and believes its low-cost business model will position it better than its competitors.

Still, inflation is "going to be serious," Wal-Mart U.S. CEO Bill Simon said during a meeting with USA TODAY's editorial board. "We're seeing cost increases starting to come through at a pretty rapid rate."

Along with steep increases in raw material costs, John Long, a retail strategist at Kurt Salmon, says labor costs in China and fuel costs for transportation are weighing heavily on retailers. He predicts prices will start increasing at all retailers in June.

"Every single retailer has and is paying more for the items they sell, and retailers will be passing some of these costs along," Long says. "Except for fuel costs, U.S. consumers haven't seen much in the way of inflation for almost a decade, so a broad-based increase in prices will be unprecedented in recent memory."

Consumer prices — or the consumer price index — rose 0.5% in February, the most since mid-2009, largely because of surging food and gasoline prices. Core inflation, which excludes volatile food and energy costs, rose a more modest 0.2%, though that still exceeded estimates.

Add to this the shock that was today's grains report, and the summer is about to seem like straight out of Harare.

Farmers will struggle to replenish rapidly shrinking U.S. grain stocks this year, despite plans to sow the most land to corn since World War Two and near-record acreage to soybeans, two U.S. government reports showed on Thursday.

Chicago corn prices surged their daily limit, while soybeans and wheat jumped more than 3 percent as traders looked past higher-than-expected figures in the Department of Agriculture's annual planting survey to focus on inventories, which fell much more than forecast.

The report underscored the fact that U.S. farmers are now reaching the limits of arable land in the world's biggest crop exporter, with increased corn sowing coming at the expense of soybeans and cotton. The spring wheat crop, while among the biggest in decades, could yet shrink.

Here is why some grain traders made millions today:

 This year's spring planting season in the world's biggest crop exporter is being watched more closely than ever by countries fearful that further increases in already record-high food prices could stoke unrest.

An analysis of the data based on the acreage estimates and historical yields suggested that the corn harvest could be the largest ever and soybeans the third-largest.

But that would still leave corn inventories at the end of the 2011/12 season at the equivalent of just three-weeks' supply, and soybeans would dwindle to scarcely 10 days' cover. Analysts say prices must rise high enough to reduce demand.

"This turns us back to having to ration the corn," said Charlie Sernatinger, analyst at ABN Amro.

May corn jumped 30 cents to $6.93-1/4 a bushel, hitting the daily exchange limit; options trading suggested further gains to more than $7.15, near the post-2008 peak of $7.35 hit on March 4. Soybeans jumped to over $14.18 and wheat recouped part of its 20 percent slump since mid-February.

As we expected over the weekend, the commodity correction is over, and absent another nuclear explosion (which still will be priced in within minutes) commodities have only one way to from here.

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DaveyJones's picture

either that or really small containers

Cash_is_Trash's picture

Why isn't this man Chairman of the Fed? Or for that matter, anybody with basic understanding of economics.

HarryWanqer's picture

The Chinese will find a way.  Dog skins will absorb the cotton shock.

Spastica Rex's picture

I see what you did there. Clever.

Seer's picture

Faber is little different than the rest... It's all about Ponzi, and Marc speaks (43 second mark) "sustained economic growth," which IS Ponzi: no such thing as sustainable GROWTH on a finite planet!

Give me 5 minutes with people like Faber and I'll have them confessing that they're no more than shills looking to scam folks... (NOTE: that he likes gold and farm land isn't the point- I do as well, but unlike he and most others, I don't look to profit off them by spewing BS).

the mad hatter's picture

Wal-Mart CEO to America: "Get ready to bend over at the cash register because Uncle Sam will take your dollars while Uncle Ben will water down the dollars you already have. Don't shoot the messenger."


Price everything in gold or silver and you will see what rapid monetary base expansion does to prices.

jus_lite_reading's picture

BUY all the gold and silver you can. I'm at 80% of my asset allocation in PMs. Hell yes. I just sit back and watch the whole world crumble!

Now in JAPAN some crazy people tried to drive their car through the FUKUSHIMA PLANT!!! WTF?!


Crazy nuts! If they don't die now from the radiation they'll get shot! WTF?!

Rastadamus's picture

100% PM's here. Trying to cushion Babylon's fall. Gold is known to be soft.

Thomas's picture

I am 60%. Some days it feels like I am 40% lite and some days it feels like I am 60% too long. These douche bags at the Fed are sure making it hard.

DoChenRollingBearing's picture

I am at 10%, it has taken me a long time to get there.  But, upon my return, 11% is my next stop.  The bulk of what I have is in gold, but I have silver, platinum and a little palladium too.

I noticed premiums seem to be picking up (24hgold.com has a nice handy little widget showing metal value vs. eBay prices, scroll to the bottom of their page).

¨Paper food¨ ETFs like DBA and JJG can help you make some money as food prices go up.  But, they are paper.  They are also diversification, and diversification is one of my favorite words.

GoinFawr's picture

DCRB I thought you dumped your silver? Or did you just mean the 'proxies'?

On Zimbabwe:


Mr Lennon Hendrix's picture

So can large cap equities/bonds.  This is a financial corporate takeover of the economic system afterall.

SilverRhino's picture

Very nice little widget.   half dollar pieces are blown but ebay appears to be showing at least a 15% premium over current spot prices on everything.


DoChenRollingBearing's picture

But the 24hgold.com / eGay widget is good!

eGay sucks...  LOL.  Good one!

RockyRacoon's picture

Excellent source there, DCRB!  Look at the links "eBay" and copy the link locations to use in an eBay page search routine.   The search terms are excellent.

Example:  Search for Silver Eagles:

Silver Eagle* (1oz*, "1 oz*", 1ounc*, "1 ounc*", 1, "1", coin*) -(gold, black, pound, "1", mark*, gram*, "1 10*", mexico, reich*, morgan)

Or, just use the entire link in your search window.

RockyRacoon's picture

eBay been velly, velly good to me.  Both buying and selling.  Some seller has to be at the low end of that "average" eBay pricing.  All ya gotta do is find the good ones.  I have.

Bananamerican's picture

"I am 60%. Some days it feels like I am 40% lite and some days it feels like I am 60% too long. These douche bags at the Fed are sure making it hard"


Robot Traders Mom's picture

Only 80%? I hope your other 20% is in guns, ammo, food, and water.

You either believe in the truth and hold 100% or you hold and aything less and are trying to make a quick buck.

DoChenRollingBearing's picture

Nooooooo, Robo-Mommy!

I too believe we are headed for real problems like you and above posters.  10% is OK, not great but OK.  11% will be better, 12% better yet.  There is value in diversification...  I have typically been a bad speculator or predictor of the future.  100% in ANYTHING seems unwise, at least to a Bearing.

You are quite correct to be armed up and have food and water stocked up, I´m there too, dude(tte)!

mtomato2's picture

I'm seriously beginning to wonder, Bearing Bud.  Some days I think we are just going to bump along the bottom for the rest of eternity.  And I don't want that.  Like most posters here, I want a crash and a renewal.  I want truth.  I want equal justice.  The American Way?  I don't even know what that means anymore.

trav7777's picture

you don't want a crash.  Trust me.

Look at the soviet crash...how long did the shit suck real bad?  Are they "back" yet?

tmosley's picture

To be fair, they were never really "there" to begin with.

Argentina might be a better example for your metaphor, as they have never regained their first world status.

WaterWings's picture

Yes, I prefer a Police State, a la Orwell - I don't need all my teeth and spleen anyway. I love international banks that privatize gains and socialize losses. I *heart* corporations that pay slave wages; poison the environment and our bodies. Wrap your arms around the military-industrial complex: Bombs, not weddings! Underage sex slaves, not wives! Heroin addictions, not self-worth!

Soon, I won't have to think anymore!

RafterManFMJ's picture

You need to drink more fluoridated water.  You'll find it...calming.

Triggernometry's picture

40% PM's
15% water
15% food
15% fuel
10% Cu coated Pb
5% Lead Delivery Devices

SilverBoy's picture

Your SHTF Portfolio is well diversified.  Me Likes

tmosley's picture

That is either a LOT of water, or you are using a slingshot for delivering your lead.


malek's picture

30% PM (exactly on my target level), but overall 90% out of the USD.

traderjoe's picture


The Fed is performing exactly as designed: (1) create inflation to skim wealth from the citizenry; (2) lower interest rates to eliminate other capital creation competition than bank loans; and (3) consolidate economic control by the money center banks. Their plan was brilliant and well-executed. Www.bigeye.com/griffin.htm

NotApplicable's picture

Your second point is one I rarely see discussed, and why I believe that after the coming shake-out, the Fed, IMF, et al., will embark upon pushing ZIRP all the out to the end of the yield curve, basically turning lending into an activity that only pays off in political currency.

Marx would be proud.

traderjoe's picture

In fractional reserve banking, banks create money out of thin air. Therefore, any positive interest rate is essentially an infinite gross margin. They need some positive interest rate tho. That's what makes governments such great borrowers for the banks. Through regulatory capture, political influence, etc. banks essentially control their own customer(s). They can (relatively) prevent defaults, unlike those pesky homeowners and commercial building owners.

Oh regional Indian's picture

Tj, regulatroy capture about captures the length and breadth of it.

Make the law, make the money, kill any real competition, barriers barriers barriers.

Simple game if you have regulatory capture.


NotApplicable's picture

They will only need a positive rate until the day they are nationalized, completing the circle of fascism (otherwise known as a choke-hold). Between Benron and the IMF, they will hold title to all of the world's wealth, while their liabilities are nothing but promises of promises to pay.

The future I see will not allow for such "evil" as profit, freedom or any individual function that threatens the alleged "Greater Good." I agree with your views from a market perspective, but the thing is, I don't believe there's going to be any markets in our future (especially financial, as they are already insolvent). As you stated above, the plan has been well executed.

I am Jobe's picture

Logic and Common Sense is not soemthing that is required to be in the GOVT. If you have a degree from harvard and can BS your way, all that matters. People with skills need not apply to GOVT jobs.

dizzyfingers's picture

That idea is too intelligent for this country.

Government and the fed are where people go who can't get real jobs because they're too stupid or too unemployable for other reasons.

Resist organized crime; vote for no one.

Cognitive Dissonance's picture

When exactly did a half gallon of ice cream become 25% smaller and the price go up 35%? Maybe I blinked and missed the announcement.

Cash_is_Trash's picture

Cog, at the supermarkets here in Brazil, you could buy 1.5 litre boxes of juice for $4 dollars. Now the container is 0.75 litres for about $4.50 dollars.

Cash_is_Trash's picture

I hear that brushing your teeth reduces the sensation of hunger.

Perhaps there's an app for that!

Mr Lennon Hendrix's picture

If the Chinese had known that, they would not have used their plastic on rice!

Cash_is_Trash's picture

Silver, rather nano silver is now used in toothbrushes as a disinfectant.

For real: http://www.amazon.com/Mouth-Watchers-Nano-Silver-Toothbrush/dp/B003DQD65O


Mr Lennon Hendrix's picture

Fluoride is getting its ass handed to it.