Tuesday, September 14, 2010

Is this good?

With all the talk of zero inflation, I find it interesting that corn (above), wheat, sugar, coffee, cotton and, of course, precious metals are all in strong rising trends. Cotton (below) should be especially troublesome for the deflationists.


Paul O'Cuana said...

It's one of the downsides to globalization that many commodity prices remain stubbornly high.
But demand in terms of real final sales is just not there in the West.
The losers though are businesses not consumers. If I've lost my job and coffee prices go up I'll switch to tea. But what does Maxwell House do when coffee prices are high but there is no demand at home?

They get squeezed like a bean.

Michael Kahn said...

I'll give up medicine before coffee.

True story from a late trader friend:
From 2008 - How much will you pay for gasoline for your car?
Answer - as much as it takes

Paul O'Cuana said...

My wife just corrected me on the Maxwell House example. Apparently, they are using this opportunity to squeeze the competition as they are the only producer offering sales promotions now.
The real reason to have a lot of cash on the balance sheet is to survive the Great Recession and maybe knock the competition for a loop.

Will said...

Talking about commodities always makes me hungry.

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