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No Inflation? General Mills Begs to Differ

CrownThomas's picture




 

Repeatedly, all we hear is that Zero Hedge is just some wing nut website. Always stretching the truth about the economy's woes, and constantly claiming hyperinflation is just around the corner. Ya, about that...

General Mills came out Wednesday with their Q3 earnings, and what do you suppose was one of the top points they wanted to make to their investors? Just that they were experiencing significantly higher input costs year-over-year.

As a matter of fact, they say that YOY inflation input costs were actually higher by 2% 3% 5% 8% ...

10%-11%

So is it deflationary for the consumer if the 3rd biggest food company in America is experiencing double digit inflation?

But then again what do I know, I'm just a contributor to a blog. And I don't even have a Phd.

 

 

 

 

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Sat, 03/24/2012 - 01:10 | 2286041 cynicalskeptic
cynicalskeptic's picture

Look at a Dial soap bar now.... a big scoop is missing from the back......   Bar looks like it's the same size in the wrapping but you're not getting as much.

FUnny how inflation stats don't account for the downsizing.

Sat, 03/24/2012 - 00:37 | 2286006 Uber Vandal
Uber Vandal's picture

24 can cases are now 20,

1.0 liter bottles of soda cost what 2.0 liters once cost,

ethanol laced gasoline has less BTU's than non-ethanol laced gasoline thus reducing MPG,

 

Sat, 03/24/2012 - 00:02 | 2285949 silverdragon
silverdragon's picture

Silver bitchez

Fri, 03/23/2012 - 23:52 | 2285946 silverdragon
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The international reputation of Zero Hedge is, "the place where the smastest guys in the room hangout".

Sat, 03/24/2012 - 04:21 | 2286189 Colonial Intent
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http://en.wikipedia.org/wiki/Enron:_The_Smartest_Guys_in_the_Room

Thats one hell of an insult to the tyler's , you got data to back that up?

Sat, 03/24/2012 - 04:22 | 2286190 Colonial Intent
Colonial Intent's picture

Doh,

you got me,

i dint see the sarc till i read it twice.

Fri, 03/23/2012 - 23:33 | 2285924 radch3vik
radch3vik's picture

Don't forget NIKE margins being pressured as well by higher input costs "more than offsetting" pricing increases and SG&A leverage.

Fri, 03/23/2012 - 23:28 | 2285915 Pejorative Requiem
Pejorative Requiem's picture

This is a nice grab off the info highway. Great post. We're quite a bit over 11% YOY though.

Fri, 03/23/2012 - 23:22 | 2285911 The Beam
The Beam's picture

*insert sarcasm*   No worries, No worries.....that is FOOD and ENERGY costs and we don't consider that inflation. It's not like those effect the average consumer.

Nothing to see here. ZeroHedge is a crack pot site with a bunch of zit-kids hiding in their parent's basements.

*end sarcasm*

Sat, 03/24/2012 - 10:39 | 2286451 DaveyJones
DaveyJones's picture

food and energy costs will also rise together cause food is energy. Ten calories of oil in every food calorie. Come to think of it just about everything will also rise because oil is behind...just about everything. A garden removes a lot of oil cost, and pesticide cost, and marketing and middlemen and GMO labs and..... 

Sat, 03/24/2012 - 20:37 | 2287514 The Beam
The Beam's picture

*comes out wearing his Ben Bernanke halloween outfit*

Silence Davey.

*shows Davey his heart*

I have your heart!

Now direct the ship. Course due soverign nations.

 

Fri, 03/23/2012 - 23:14 | 2285902 jonjon831983
jonjon831983's picture

Funny was mentioning this to my friends on wednesday in conjunction with a commodity price report.

Across the board margin compression... can only keep prices the same for so long... before you need to cut staff... "streamline"... then reduce quantity and quality...

Fri, 03/23/2012 - 23:03 | 2285894 Seasmoke
Seasmoke's picture

damn, i sure am going to miss my Lucky Charms

Fri, 03/23/2012 - 23:01 | 2285887 Plumplechook
Plumplechook's picture

Lucky the Leprachaun says a Lucky Charm-led recovery is just around the corner. 

Fri, 03/23/2012 - 22:57 | 2285881 shuckster
shuckster's picture

Still doesn't justify a 200% run up in the price of gold and other commodities. And consumer's are crunched. If GMills ups the price, they will quickly see consumers flee for cheaper products. Americans hate expensive stuff - they like stuff cheap and available. Not saying money isn't losing value, quickly, but we aren't seeing the death of the dollar - not yet at least....

Combine this with government spending cuts in the near future and I think this still spells deflation (medium term)

Sat, 03/24/2012 - 11:45 | 2286589 steve from virginia
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Inflation in certain assets in finance markets, deflation elsewhere such as wages and real estate.

Real estate deflation hasn't really begun yet.

Neither have the deflationary impacts of high fuel prices been felt. People buying goods that embed petroleum such as breakfast cereal ... cease to buy other goods (and vice-versa).

I don't buy General Mills products.

BTW: adding to debt to retire or roll other debt (which is what the Fed does when it expands its balance sheet) does not add to money supply, it changes who or what has custody of the original debt. Money-supply expansion here is a bookkeeping artifact.

Creating currency to retire debt also does not increase the money supply as repayment indicates the extinguishment of both the debt and the currency which again only changes who or what entity has custody of the original debt (liability).

The liability becomes the publics' which in the case of the US means that the liability does not exist, b/c the US is effectively immortal and will outlive the real claim the liability represents.

Generalized inflation due to the finance expansion of money supply reduces the nominal worth of debt taken on over time but this inflation represents the 'opportunity cost' of obtaining a good with money rather than (the cost) of holding it. This opportunity cost diminishes when the form of the money is credit. Credit cannot be held unless the cost of this credit is very low such as the bond market.

The fact the the bulk of the S&P 500 are holding over $1 trillion in cash is the only indicator you need to know.

Thank you and have a nice day.

Sat, 03/24/2012 - 17:21 | 2287107 holdingontomypants
holdingontomypants's picture

So either I am confused on your statement the feds creating money doesn't increase the money supply or you left something out of the equation that needs attention.

Correct me if I am wrong but doesn't running a 1.5 million spending deficit mean the federal government is spending money in the economy and the fed reserve has to print the money (even if its digital) to cover it? Doesn't federal deficit spending increase money supply as an effect of deficit? Doesn't that mean there are more diluted dollars in the economy (mainly in wallstreet)?

I know a trillion or so of the fed reserve dollars were in currency swaps so a trillion of euros were taken out of the monetary system and in its place a trillion federal reserve dollars were placed into the european financial system. The fed reserve is holding these Euros because they have no place to put them that doesn't end up back in european system. In other words Europe is spending our trillion dollars of the currency swap while we have our trillion euros doing nothing in the US?  

Just trying to understand some of these large numbers and the back and forth stuff from fed reserve and ECB.

Sat, 03/24/2012 - 16:33 | 2286996 Renfield
Renfield's picture

You sound like Mish. (Don't get me wrong - I read Mish every day. IMO one of the best blogs on the net.)

Trouble with the inflation/deflation argument is it too often turns into academic definitions of what is money/credit/debt and competing theories thereof. Gets bewildering.

I think the reason most people believe that inflation is heading out of control is because most of us are just focused on the prices of stuff we need. Not saying that's the whole picture, but basically when Gen. Mills says prices are up 11%, that pretty much outweighs everything else in the eyes of a significant majority of us who have to do the grocery shopping each week.

The trouble with some economic theorists I've read on the internet, is that there seems to be "no clue" (or weighing?) of what is pragmatic and functional in the budget of a majority of citizens. If you aren't putzing around in the housing market and you have to stretch the budget again to avoid putting the bread, milk and gas on your credit card at the end of the month, who gives a shit if the housing bubble is in "deflation"? It's the price inflation of what you're buying that week that you are concerned with. Speaking for myself, I have no problem with academics and economic theories putting articles in textbooks and maybe giving advice or opinions, but I get nervous as hell when I see a group of them trying to control my money supply and my prices.

Especially when they start saying things that sound suspiciously like they're asking me to believe them instead of my own lyin' eyes. Not having a go at you - I mean central bankers and other policymakers, for example, who claim that inflation is too low and set policy accordingly. Or Krugman who insists on demanding more stimulus every chance he gets, since the government hasn't taken on enough debt yet. I also think that's why everyone's piling on that guy further down this thread who is talking about low core inflation.

I am, obviously, not an economist, nor do I try to play one on the internet. :-)

Sat, 03/24/2012 - 12:57 | 2286717 Kayman
Kayman's picture

steve from virginia

2 questions

1. of the nearly $1 trillion of treasuries bought by the Fed thru the PD's to fill the budget deficit; is this new money supply locked out of the real economy ? 

2. Using a corporation, say LP, which is sitting on a few hundred million in "cash, but is more than offset by a multiple of several hundred million in debt; is this really cash on the sidelines ?

Sat, 03/24/2012 - 03:00 | 2286141 RafterManFMJ
RafterManFMJ's picture

I've found you can fill your bowl of wheaties with up to 1/3 sawdust without really changing the taste.  Buy whole milk and cut it with tap water, add some Elmer's glue as thickener.  This breakfast keeps me filled up all day.

Sat, 03/24/2012 - 12:47 | 2286710 Kayman
Kayman's picture

"add some Elmer's glue as thickener. "

Try the new Made in China cereal.  There's nothing like the smell of fresh melamine in the morning. 

Sat, 03/24/2012 - 05:41 | 2286226 memyselfiu
memyselfiu's picture

and sticks to yer ribs!

Sat, 03/24/2012 - 08:33 | 2286313 lakecity55
lakecity55's picture

"Try our New Product: Afrocrunchies! Did you wonder where all the dead folks from Africa were going? Into our New Cereal Sensation! A crunchy taste sensation with a chocolate twist!

"And, after the NDAA goes into effect, you'll love our next cereal: CrackerCharms! 100% RDA of Vitamin C with a sweet Vanilla taste!"

Fri, 03/23/2012 - 23:33 | 2285927 Freddie
Freddie's picture

Guess you don't shop much.  There are not many cheap alternatives to general mills.  The generics are not that big a savings.

Sat, 03/24/2012 - 04:30 | 2286197 barliman
barliman's picture

 

BINGO!

The compression of the price range is a critical marker for the overall health of an economy.

Brand names will not support premium pricing - but in many cases the same plant makes the generics as well.  The brand name comes down by sacrificing margin. The generics go up in price to cover the inflation.

When they get to close together, some brand names will disappear ... but more of the generics will disappear than the brand names.

Stocking up NOW on foodstuffs would be a really good idea. It's likely to be your best ROI and you would like to keep eating, wouldn't you?

barliman

Sat, 03/24/2012 - 10:27 | 2286446 DaveyJones
DaveyJones's picture

go Mormon, go Garden, go cooking skills

Fri, 03/23/2012 - 23:33 | 2285922 Pejorative Requiem
Pejorative Requiem's picture

Sure hope you like dog food. Deflation? Do you even know how to spell trillion?

Sat, 03/24/2012 - 07:42 | 2286274 toadold
toadold's picture

Uhh, have you priced dog food lately.  Especially since the last batch of dog deaths due to additives from China the quality control costs on pet food have gone up. You still have to transport that stuff to stores......However I've got some old Indian receipies for dog.  

Sat, 03/24/2012 - 09:48 | 2286394 Coast Watcher
Coast Watcher's picture

I've started reading the ingredients on dry dog food. Almost all of them start with some variation of "corn solids" or corn meal or corn something. No wonder my dog won't eat that shit, and she grew up on the street in Taipei eating whatever nasty stuff she could find.

Sat, 03/24/2012 - 23:22 | 2286749 dogbreath
dogbreath's picture

you know things are bad is when you have to jack off the dog to feed the cat

<-----  I take it these people don't have pets

Sat, 03/24/2012 - 01:12 | 2286042 cynicalskeptic
cynicalskeptic's picture

Start worring when people stop buying pet food to feed their pets (or even eat themselves) and start eating their pets.

Fri, 03/23/2012 - 22:33 | 2285847 Mariposa de Oro
Mariposa de Oro's picture

GM is just using inflation as an excuse to price gouge poor American consumers.  There is no inflation. /SARC

Fri, 03/23/2012 - 22:27 | 2285834 sangell
sangell's picture

Think we got it bad in the US, Reuters is reporting that there is a shortage of beans in Mexico! And what's going on with bread? I was dispatched to the store to get some hotdog buns and a bag of 8 was $2.70. I bought them last summer if memory serves me for 99cents or something?

Sat, 03/24/2012 - 07:34 | 2286269 johnQpublic
johnQpublic's picture

4 bucks a loaf for shitty bread here

thats why i started baking my own

tastes better and make a loaf for a buck (assuming energy cost from running the oven equals cost of materials....50 cents of flour ..fifty cents of electric)

Sat, 03/24/2012 - 07:54 | 2286286 Red Heeler
Fri, 03/23/2012 - 23:47 | 2285945 Freddie
Freddie's picture

At least in Mexico - people have jobs and a valuable currency.

Fri, 03/23/2012 - 22:16 | 2285814 Overpowered By Funk
Overpowered By Funk's picture

Tell that to Steve Leisman, the Fed loving apologist and Bernanke fanboy. 

Fri, 03/23/2012 - 22:13 | 2285807 rosiescenario
rosiescenario's picture

Here's the other take on this: while input costs have gone up, has Genl Mills been able to pass it along or are they experiencing margin compression? ...and is this margin compression going to reduce future earnings?

 

Just my opinion but when you combine a cash strapped and very price conscious consumer with companies' experiencing large raw material increase you ar going to see lowered earnings which have not been discounted (yet) by the market.

 

 

Sat, 03/24/2012 - 02:08 | 2286085 Agent P
Agent P's picture

Some actual price increases, but mostly weigh-outs (same price, less quantity), which is a form of price increase most consumers rarely notice.  Mills has been doing this for the last few years, and they're not alone...I bought some snacks for company last week, and the bag of Lays BBQ chips was only about 1/3 full when opened...the wife put away the big serving dish because the whole bag of chips fit in a cereal bowl.  It was insulting.

Sat, 03/24/2012 - 16:26 | 2287016 malek
malek's picture

That's funny - in my area Lays chips are still 10.5oz a bag (regular size, plain salted), while a competitor has decreased their package weight to 9.5oz ...

Sat, 03/24/2012 - 12:41 | 2286701 Umh
Umh's picture

I'd love to see how they seal the bags trapping all that air in them!

Sat, 03/24/2012 - 15:42 | 2286948 Chuck Walla
Chuck Walla's picture

I'd love to see how they seal the bags trapping all that air in them!

 

They pipe in Obama speeches... The hot air fills more completely.

Fri, 03/23/2012 - 22:15 | 2285813 TruthInSunshine
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Contrary to the author's claim that ZH is perceived as a "wing" or "fringe" site, my personal experience interacting with people and web traffic itself (as well as seeing Zero Hedge sourced articles and claims appear in far more 'conventional' sources) indicates that the mountain is moving to Zero Hedge.

Fri, 03/23/2012 - 23:03 | 2285893 Freddie
Freddie's picture

Anyone who shops knows that inflation is 10%+++.  Those shopping with WIC cards aka food stamp credit cards are filled with bliss.  Hope & Change.

Fri, 03/23/2012 - 23:30 | 2285918 rocker
rocker's picture

Hope and Change has notihing to do with anything, if it matters at all.  I take it that was political.

The last one spent more money going to war for a lie than any other and put it all on a credit card.

Think.  Kick the Can Down the Road.   This one is doing the same repairing the damage left after.

It's a disease, the only difference is who it's spent on.   Got any real Money?  

Sat, 03/24/2012 - 01:40 | 2286073 barliman
barliman's picture

"Hope and Change has notihing to do with anything, if it matters at all. I take it that was political.

The last one spent more money going to war for a lie than any other and put it all on a credit card."

One year & 36 weeks on ZH and you bring this weak-ass, Obama worshipping, "It's all Bush's fault" shit into the mix ????

Who on here, other than your fellow trolls, do you think has missed all the documentation on ZH of the massively destructive spending and lawlessness of the Obama administration ???

"This one is doing the same repairing the damage left after."

LIAR!   This one is leading the Most Corrupt Administration Ever into the premeditated destruction of the country and its economy while licking bankers asses morning, noon and night. You pretend to a ZH regular's detachment while forgiving the sins of your Master.

IF anyone other than Obambi was letting John "Fuck the little guys" Corzine walk around free after today's headlines, the MSM would form their own mob to drag his ass to into the Rose Garden for a public stoning.

Get your sorry self back to Huffington Post, bitch!

barliman 

P.S. To any of the ZH community who are surprised or offended by my obscenity, I found this individual's poser attitude on top of his demented reasoning to be unforgiveable.

Sat, 03/24/2012 - 16:20 | 2287010 malek
malek's picture

I think it's still too close to call if Baby Bush or the current adminstration is "the Most Corrupt Administration Ever."

But for the current one it is still an ongoing race and they're working hard.

Sat, 03/24/2012 - 15:40 | 2286945 Chuck Walla
Chuck Walla's picture

@barliman  Rock on, Bud. That ass hole is another poser from Media Matters.  The propaganda, like the printing must, nay, never can stop until the ride is over. Bankruptcy or Socialist Paradise slavery.  

 

That clown is proof Eddie Bernays knew what he was doing.

Sat, 03/24/2012 - 10:07 | 2286415 HiHoAg
HiHoAg's picture

barliman <golfclap>Out-fucking-standing<golfclap>

 

Sat, 03/24/2012 - 09:03 | 2286349 bushwarcrime
bushwarcrime's picture

You blew it by going for the jugular, lighten up Francis.

Do NOT follow this link or you will be banned from the site!