Current Affairs effect on the market

Chose the FLT company because the CEO is a friend.

Inflation (cpi) is merely a reflection of what’s happening on the P&L of business.

On the “expenditure” column the 3 largest numbers are usually wages, energy & shipping, often in that order. When the expenditure no.s rise then business must raise prices to offset.

In the past the usual culprit of rising expenditure thus inflation has been wages - this time around that has not been the case - the other 2 have been the driver.

Inflation change is slow, takes a while for increased prices to reach the consumer - oft times the mfctr will absorb some increases then likewise the wholesaler, eventually the retailer - competition is the driver here.

Shipping rates peaked late 21 at just over $10k per container - up from an average of 1.7

The drop has been steady in 22 - by mid June just over 7k - still high nonetheless - finally back to 2k beginning of 23.
Problem is that energy prices went back on the rise mid 23 with wholesale energy stubbornly high - those have begun to fall in recent months.

The key going forward will revert back to wage levels.

EG is usually influenced by Eur/Usd & Gbp/Usd

Take today for example - EG on the rise from 87.00 & reasonable chance is headed to 87.50

GBP/USD today fell back about half yesterday’s rise on the cpi news, on the other hand Eur/USD has fallen about a quarter.

Intermarket analysis by John Murphy is a good read on the Gold/Bond/Usd relationships

China/US meet now on - if good outcome then could have positive effect on Aud - early days (hours) yet.

For guys following the EURO. I think better days are coming for this currency. If you trade the EUR/USD pair I think now is the perfect time to enter a long trade. Why? For two reasons:

  • Historically the Euro always tends to finish the year in an uptrend. This is related to the consumer behaviour of the Europeans. As the end of the year approaches, people from Europe tend to spend a lot. Whether it is connected with Christmas shopping or investing their saved money, they spend. This positively affects the economy and the currency.
  • Another thing is the economic indicators. The last ECB meeting was the first time they didn’t decide to continue with the hike of increasing the interest rate. This is positive news. This means that the inflation is within the frames and knowing that the central banks react slowly, I think the next meeting will have even better news.

Yup. I was talking to a crop importer and she was saying prices are still above pre pandemic levels but def way below 2021 peak. Asking friends in the food industry also and prices have come down but still pretty high like you said. Curious to see what will happen in Q1 2024.

Many factors at play I suppose.

One factor for sure is good ol’ profit making - it will take some competition to rectify.

This headline from BBC this morning.

Makers of some popular food brands have raised prices by more than their costs over the past two years, according to the UK’s competition watchdog.