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No Inflation? Commodities Highest Ever For This Time Of Year

Tyler Durden's picture


While every central banker and policy-leech spews forth the government-supplied statistics on inflation - noting that all is well, carry on - we recently pointed out that Gas Prices are their highest ever for this time of year. Of course, the standard supply constraints (or technical) reasoning was applied to dismiss this as transitory (even though it has continued to rise since); but what is perhaps more worrisome is the broad-based nature of the real inflation that is leaking into our global supply chain. The 24-commodity heavy S&P GSCI index (widely recognized as a leading measure of general price movements and inflation in the world economy) has never been as high in early February as it is currently - ever. And with global growth stagnating at best, it seems a tough call to blame 'recovery' for this inflating (fastest pace in 8 years) raw material price leaking cost-push inflation (and margin-compression) into the real economy.




and the fastest rise in 8 years...


Charts: Bloomberg


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Tue, 02/05/2013 - 13:02 | 3216610 hedgeless_horseman
hedgeless_horseman's picture

Glad we grass feed our cattle on pasture.


Last night's dinner of Steal au Poivre with unctous sauce and garden sweet potato casserole.

Tue, 02/05/2013 - 13:02 | 3216633 mayhem_korner
mayhem_korner's picture



I just checked the tags on my kids new clothes.  Even they are made of corn.

Tue, 02/05/2013 - 13:04 | 3216635 Popo
Popo's picture

Is that a glass of milk?    LOL.

Tue, 02/05/2013 - 13:09 | 3216659 hedgeless_horseman
hedgeless_horseman's picture



Raw milk from our cow; it has not gone up in price, and I know exactly what is in it. 

Has the price of Pepsi-Coke many feed their kids for dinner gone up?

Tue, 02/05/2013 - 13:11 | 3216671 TrumpXVI
TrumpXVI's picture

MMmmm....Pepsi.  It's not just for breakfast anymore.

Tue, 02/05/2013 - 13:20 | 3216710 Jason T
Jason T's picture

"By The Sweat of Hedgeless Horseman's Brow He Will Eat His Bread."


Amen Brother.

Tue, 02/05/2013 - 13:42 | 3216802 a growing concern
a growing concern's picture

Don't go talking too loudly about raw milk, HH. That's terrist talk, you know.

Tue, 02/05/2013 - 14:08 | 3216889 ceilidh_trail
ceilidh_trail's picture

Ikea glassware?

Tue, 02/05/2013 - 14:40 | 3217009 Midas
Midas's picture

I like the candle.  I raise my own whales for the blubber to make candles.

Tue, 02/05/2013 - 15:10 | 3217118 hedgeless_horseman
hedgeless_horseman's picture



Libbey glassware, and I think this style is still made in USA

LBY stock is up 25%+ over 12 months, in nominal USD terms.

Thu, 02/07/2013 - 07:49 | 3222478 ich1baN
ich1baN's picture

I am in Beijing right now.... there is no such thing as steak or that fancy French word here. My mouth is watering like Niagra Falls.

The raw milk is something I have always wanted to try, but it is illegal to sell where I used to live. Gubment sayz its bad for me. They always know best.

Tue, 02/05/2013 - 13:11 | 3216675 Motorhead
Motorhead's picture

Sweet potatoes?  Man, bring on the fries...or yams, hehe.

Tue, 02/05/2013 - 13:20 | 3216714 LawsofPhysics
LawsofPhysics's picture

The state just called.  It's about the taxes on your meadow...

Tue, 02/05/2013 - 13:48 | 3216823 LawsofPhysics
LawsofPhysics's picture

Not in our neck of the woods.  When the local governements run out of money, they will be at your doorstep.  The only thing that is assured moving forward.  Enjoy that while it lasts.  Some of the southern states still enjoy these types of exemptions.  Our operations in Georgia and South Carolina do, but water is becoming a problem as we spar with the developers/profiteers of urban sprawl.

Wed, 02/06/2013 - 08:44 | 3219422 Red Raspberry
Red Raspberry's picture

Illinois doesn't tax farmland at it's sale price either.  It's a big problem for counties that don't have industry.  The home owning property owners have to bear the burden.  At the same time the farmers ejoy no sales tax on farm items plus federal subsidies.  And the states promotion of ethanol in gas.

Tue, 02/05/2013 - 13:23 | 3216725 NidStyles
NidStyles's picture

Would you mind adopting a 32 year old former Infantryman turned Economist and his wife?

Tue, 02/05/2013 - 13:55 | 3216850 hedgeless_horseman
hedgeless_horseman's picture




Your wife (please send photo) would need to wear a uniform, and if you are a Keynesian economist, then you just might be qualified to help us with the horses.


Tue, 02/05/2013 - 15:11 | 3217143 NidStyles
NidStyles's picture

LMAO! Not Keynesian, and my wife looks better with a tight skirt, she has a nice ass.

Tue, 02/05/2013 - 14:12 | 3216902 Anonymous peon
Anonymous peon's picture

If adopted would not you and your wife become brother and sister............

Tue, 02/05/2013 - 14:39 | 3217005 francis_sawyer
francis_sawyer's picture

I'm my own grandpa...

Tue, 02/05/2013 - 15:12 | 3217144 NidStyles
NidStyles's picture

Doesn't matter, did you see that steak?

Tue, 02/05/2013 - 14:11 | 3216894 tango
tango's picture


Got a ribeye yesterday at Publix (just cut), added a rub of brown sugar, Pimenton, salt, garlic red wine and olive oil then grilled an hour later with baked potato - my once a month treat to myself.  I remember the farm and my gripe with milk was the onion taste!  Butter was incredible though. I had a Valpolicella instead of milk (lol)

Wed, 02/06/2013 - 10:32 | 3219784 Pseudo Anonym
Pseudo Anonym's picture

pfft, you wish

Got a ribeye yesterday at Publix (just cut)...

you ate meat glue ( (

bon appetit

Wed, 02/06/2013 - 10:38 | 3219813 Pseudo Anonym
Pseudo Anonym's picture

pfft, i call bullshit on your photo of steak.  i can tell it is meat glue, not a real steak:

bon appetit

Tue, 02/05/2013 - 13:03 | 3216615 Cult_of_Reason
Tue, 02/05/2013 - 13:07 | 3216617 mayhem_korner
mayhem_korner's picture



At some point, the yield on the 10-YR will start to behave like this, too. 

(and that won't be very nice, will it Precious?)

Tue, 02/05/2013 - 13:55 | 3216852 derek_vineyard
derek_vineyard's picture

just as long as the 10 year styas 2-5% below the inflation rate.

inflation is the feds only goal----so people nominally see higher numbers but in real terms are surrendering their standard of living

Tue, 02/05/2013 - 13:00 | 3216618 Whiteshadowmovement
Whiteshadowmovement's picture

Ive heard a lot of rumblings of people planning to go long nat gas so I expect a slamdown to $2.50 fairly soon

Tue, 02/05/2013 - 13:06 | 3216647 mayhem_korner
mayhem_korner's picture



The shale gas investors already went long natural gas over the past 5-8 years.  (And it hasn't worked out too well for 'em).

Tue, 02/05/2013 - 13:02 | 3216620 Cognitive Dissonance
Cognitive Dissonance's picture

This is not the droids inflation you're looking for. Move along.

Tue, 02/05/2013 - 13:05 | 3216641 TotalCarp
TotalCarp's picture

This is starting to have a pleasant whiff of 2008 doesnt it? Commodities powering up and all...

Tue, 02/05/2013 - 13:06 | 3216650 Cognitive Dissonance
Cognitive Dissonance's picture

"I don't know what you're talking about." - Bernanke

Tue, 02/05/2013 - 13:08 | 3216660 TotalCarp
TotalCarp's picture

Nah off course not... Transitory.. Not reflected in cpi.. Housing market is solid and all that jazz.. Kunts...

Tue, 02/05/2013 - 13:13 | 3216682 Cognitive Dissonance
Cognitive Dissonance's picture

"Mind your own P's & Q's TotalCarp or the IRS shark will bite your fins off." - Jack Lew

Tue, 02/05/2013 - 13:20 | 3216709 TotalCarp
TotalCarp's picture

I seriously wonder some times if we are all gonna wake up in gitmo soon enuff. But i guess they will start with tylers, not small fish like moi.

Tue, 02/05/2013 - 13:14 | 3216688 Bay of Pigs
Bay of Pigs's picture

Where's Orly to talk about this horrible deflation?

Tue, 02/05/2013 - 13:38 | 3216787 papaswamp
papaswamp's picture

Careful or a drone will be circling over your house.

Tue, 02/05/2013 - 13:01 | 3216622 Yen Cross
Yen Cross's picture

  Keep printing you douchebag Bernanke! The 10year is up 5bps and the vix is down over 5%? This pinball machine is set on [full tilt]today!

Tue, 02/05/2013 - 13:03 | 3216636 scatterbrains
scatterbrains's picture

Just playing what if here..  what happens if the fed gov. cut spending by half (deflationary) at the same time announcing an official dollar devaluation (inflationary) ? Not that they would ever cut spending... voluntarily.

Tue, 02/05/2013 - 13:06 | 3216645 JethroTull
JethroTull's picture

There was a guy on the radio who was blaming speculators for the hike in prices. Was he tellign the truth?

Tue, 02/05/2013 - 13:09 | 3216667 NoWayJose
NoWayJose's picture

So if you buy a 10 year treasury yielding next to nothing, you are an investor, but if you buy a commodity you are a speculator?

Tue, 02/05/2013 - 20:07 | 3218236 yatikto
yatikto's picture

yes. if you buy items that people use for consumption or manufacturing to horde and not use, then you are a speculator.

Wed, 02/06/2013 - 13:25 | 3220434 Col_Sanders
Col_Sanders's picture


I only play Alliance.

Tue, 02/05/2013 - 13:10 | 3216669 mayhem_korner
mayhem_korner's picture



Even if speculators were to drive up prices, they need the liquidity to play the game.  The Fed's ceaseless liquidity spigot is at the root.  And this is nothing compared to what commodity inflation could be if money velocity ever picks up.

(but your new shoes are worn at the hee-e-e-e-e-e-ls...)

Tue, 02/05/2013 - 13:45 | 3216822 TotalCarp
TotalCarp's picture

Are you missing /sarc tag or are you actually a moron or a troll???

Tue, 02/05/2013 - 13:06 | 3216651 TotalCarp
TotalCarp's picture

Somebody has to say it:

Fuck you bernanke. And you krugman.

Tue, 02/05/2013 - 13:08 | 3216658 NoWayJose
NoWayJose's picture

With the world awash in liquidity, there are few places to go.  If there really is a rotation out of bonds, it all will not go to equities but rather a lot will go to commodities.  Of course, with all the liquidity, there is no longer any concern about supply and demand for commodities, since the demand is just futures contracts.

Tue, 02/05/2013 - 14:34 | 3216987 devo
devo's picture

Great comment. Spot on. Some will go into equities (as we're seeing), though.



Tue, 02/05/2013 - 13:08 | 3216661 Motorhead
Motorhead's picture

This 'dummy' sounds like that silver bear, hehe:


Tue, 02/05/2013 - 13:08 | 3216662 Jason T
Jason T's picture

Stagflation bitches!! Painful inflation coupled with piss poor econ growth

Tue, 02/05/2013 - 13:22 | 3216724 LawsofPhysics
LawsofPhysics's picture

Of course you need commodities and other real inputs for real growth.  That's a nice strawman/catch 22 you have there.

Tue, 02/05/2013 - 13:13 | 3216674 khakuda
khakuda's picture

Pay no attention to the Bernanke behind the curtain.

Tue, 02/05/2013 - 13:14 | 3216687 Meat Hammer
Meat Hammer's picture

Our money is debt, so why would anyone in DC want to pay off the debt?  Moar debt, moar money.  No debt, no money.

Except for maybe the shiny stuff.  

Tue, 02/05/2013 - 13:14 | 3216689 Inthemix96
Inthemix96's picture

Was on about inflation to one of my friends the other day.

Another awake one folks, he informed me not to worry, as it was as complex an issue as a jet engine, and winked.

Day by day, little by little more are becoming aware, give it time folks.

Tue, 02/05/2013 - 13:19 | 3216707 alfbell
alfbell's picture




Ok, so it looks like all the central banks are hard at work blowing bubbles again. Money is rotating out of bonds into stocks. The prices of oil, food and commodities are moving upwards and are going to go up up up. Interest rates are going to go up and man who knows what various and many repercussions will result all over our economic landscape.


So this begs the very essential question...

What does one do?!

Tue, 02/05/2013 - 13:22 | 3216722 khakuda
khakuda's picture

Take on as much debt as possible, live it up and default with everyone else just like the last time.

You certainly DON'T want to have assets or be prudent.  That is the lesson.

Tue, 02/05/2013 - 13:22 | 3216718 socalbeach
socalbeach's picture

Just out, Daniel Amerman's latest.  His logic is sound imo and I agree with his price inflation call,

Elections, Investments & The Battle For Future Wealth

"... Second, we need to choose an approach by which our wealth will grow with future inflation.

When we have extraordinary promises that increase each year at a rate that is greater than the rate of economic growth, then we can fairly safely anticipate what the government is going to do as a political decision: it will be paying those promises in form but not in substance. That is, in dollar terms, the government is all too likely to be paying future retirement benefits more or less in full, but they will be with dollars that aren't worth nearly as much as they are today.

If you take a look at what has been happening to the annual increases in Social Security payments, and compare that to the annual price increases of food at the grocery store, you can get a pretty good picture of what's going on right now.

As investors we are best off aligning our financial interests with inflation, so that the greater the degree of inflation, the better that we do -- even if all we're doing is achieving average results for the strategy chosen..."

Tue, 02/05/2013 - 13:24 | 3216734 LawsofPhysics
LawsofPhysics's picture

"Second, we need to choose an approach by which our wealth will grow with future inflation."


You better define wealth before you go any further.

Tue, 02/05/2013 - 13:35 | 3216769 socalbeach
socalbeach's picture

I assume he means assets minus liabilities (net worth) in constant dollars.

Tue, 02/05/2013 - 14:03 | 3216875 Variance Doc
Variance Doc's picture

LOL "...constant dollars."  Good luck with that.


Just another "investment" guide for dummies by dummies.

Tue, 02/05/2013 - 17:20 | 3217579 socalbeach
socalbeach's picture

Constant dollars as in constant purchasing power.  So for example, an est 10% price inflation rate would reduce the purchasing power of one's net worth measured in dollars by about 9%.  Too complicated for you to understand I guess.

Tue, 02/05/2013 - 13:36 | 3216775 drdolittle
drdolittle's picture

And stuff at the grocery store keeps going up. I realise the kids are getting bigger but I spend twice what I used to and have had more time to find bargains and less expensive ingredients.


Tue, 02/05/2013 - 13:44 | 3216818 NEOSERF
NEOSERF's picture

Each bag of groceries is unbelievably about $40 a piece on average.  15 years ago, you could feed a family of 5 all week for what 1 bag of groceries now costs.  Cheese and ice cream are out of control (Ben & Jerrys is over $5  - in winter!??!).  Decent beer approaching $10 a six pack.  $4-5 for strawberries on any given week - no wonder people are feeding their kids $5 value meals.

Tue, 02/05/2013 - 14:13 | 3216908 BeerBrewer09
BeerBrewer09's picture

Decent beer approaching $12-$18 per six pack here.
One woman here at work recently bought a hot dog, fries and coke at a fast food place for $10.89.

I'm buying storable food, cleaning products, hygiene items, tools, basically anything durable enough to last quite a few years. Anything I think I need, I buy, not out of impulse but for its value given its current price. I'll use coupons and buy when there are sales. It will prove to be the best investment to make in the coming years because those items are guaranteed to go up in price steadily *if not sharply* in as little as one year.

Tue, 02/05/2013 - 14:17 | 3216926 tango
tango's picture

I also use coupons but even better, the local Publix always has 2 for 1 on about 50 items every week and every week I buy - cereal, olive oil, veggies, pasta, etc  One we use and the other goes to long-term storage.  I truly do not know how someone on an average salary with a family gets by.  No wonder food stamps are on the rise. 

Tue, 02/05/2013 - 14:00 | 3216869 joego1
joego1's picture

People will be absolutely shocked this year when they try to buy meat. I hear the U.K. is taxing the air they breathe, really.

Tue, 02/05/2013 - 14:17 | 3216925 alfbell
alfbell's picture




Ok, so how to survive and prosper in a high inflation environment?

Lever up and buy as many assets at discount as possible, and pay them off in the future with cheaper dollars.

Make sure your assets and investments are tangible and will have demand and value in the market and will "appreciate" in value due to inflation.

Get as free as possible from dependency on commodities. Don't drive (have a home office or move right next to where you work); get rid of your SUV or gas guzzler and go with energy efficient vehicle; best to be in a location in which you can do everything by walking (get to work, shop, do errands, etc.); stock up on basics, clothes, tools, etc. now so you don't have to buy anything for a long time (be frugal); get energy efficiency going in the household (water heater, refrigerator, wood stove for heat, etc.) grow your own vegetables and fruit (and if you can handle it, keep chickens for meat and eggs); let's see, what else...

Am I doing good? Am I on the right track?

Tue, 02/05/2013 - 18:23 | 3217886 madcows
madcows's picture

Let me know how you are doing when you are all levered up and you suddenly lose your source of income due to economic collapse... but the lenders still want to get paid.

Tue, 02/05/2013 - 23:57 | 3218892 MeelionDollerBogus
MeelionDollerBogus's picture

Only 2 choices to make those dollars cheaper:

#1 get more dollars for the same work-hours (which is not today’s trend) than you are accustomed to

#2 get more dollars on unsecured credit so rather than paying back in any dollars… you don’t. Ever. Maybe someone else is on the hook, maybe you figure something else out, but you're far in the green if YOU never repay. That is how the game is played, nowadays.

Tue, 02/05/2013 - 14:33 | 3216982 orangegeek
orangegeek's picture

Government is injecting cash, but the economy is shrinking.


So demand for products and services are falling.


And so where is this inflation argument coming from?


Now if you said deflation, that would be another story.

Tue, 02/05/2013 - 14:53 | 3217070 NidStyles
NidStyles's picture

Inflation is the increase in the money supply, that is all it is. Some of you are putting too many connotations on the meaning of it. This is an Inflationary situation, and the economy you see is the known and very well documented symptoms of said Inflationary situation.

Tue, 02/05/2013 - 15:06 | 3217117 devo
devo's picture

Correct. There is massive inflation. That we supposedly aren't seeing it is a testament to how strong the deflationary pressures are, the govt lying, and corporations hidding it via smaller packages, slack fill, etc.

Tue, 02/05/2013 - 15:08 | 3217124 NidStyles
NidStyles's picture

Look at how much is being exported through foreign sales of the T-Bill's and the price of Oil.


It seems to me that the majority of the problem we face is that there are not enough people that actually understand how all of this stuff works, and how it's likely to play out.

Tue, 02/05/2013 - 15:24 | 3217169 devo
devo's picture

Yeah that too. China et al are subsidizing the inflation in many ways. I think everyone intuitively knows these things, but they also intuitively know it doesn't make sense (i.e. there should be massive deflation) so they're waiting on the big crash that never comes. Will it eventually? Yes, all empires fail for similar reasons. But a lot has to happen between now and then, and in the meantime there's purchasing power to be gained and converted into gold, land, etc.

Tue, 02/05/2013 - 16:05 | 3217341 NidStyles
NidStyles's picture

Cliffs: Keep Stacking.

Tue, 02/05/2013 - 14:56 | 3217041 devo
devo's picture

People missed the "read between the lines" from the JPM housing hedgefund ZH mentioned yesterday. They have inside info, and they're buying/renting houses. That means interest rates will not rise for at least 5 years no matter what. If they rise, more money printing, which will likely trigger a full blown currency war or a physical war.

Tue, 02/05/2013 - 15:06 | 3217120 NidStyles
NidStyles's picture

I caught it, I just didn't have time to say anything yesterday.

Tue, 02/05/2013 - 20:18 | 3218259 yatikto
yatikto's picture

I think money going into commodities is THE driver of inflation.  They won't be able to keep this myth of negligeble inflation that long.  The stealth inflation is running itself out.  So,  what are they going to do?  Supposed to raise rates right?

But I am certain that JPM's are in sync with the fed and will try everything to keep the commodities down. 

Tue, 02/05/2013 - 14:58 | 3217091 roadhazard
roadhazard's picture

Being a team player FAUX Business News played the dogeared, "tension in the Mid East" card this morning. I love the smell of BS in the morning, lets me know I'm still alive.

Tue, 02/05/2013 - 15:18 | 3217161 devo
devo's picture

Isn't speculation a zero sum game? For every evil speculator betting prices will go higher, there is a (benevolent?) one betting they'll go lower.

Tue, 02/05/2013 - 20:33 | 3218303 ersatzteil
ersatzteil's picture

You can even feel it in Mexico. 12$ to buy a stripper a tiny 8oz tecate light, or a shot of watered down hornitos.

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