Monday, August 11, 2008

Food for Thought

Another title for this post was "What the Bagelman knows."

I know that everyone is quick to raise prices when input costs rise - crude oil for one. But the local bagel shop still sports a sign in the window explaining why bagels now cost a lot more than they did a year ago. Wheat prices are through the roof!

But check out this chart. They are not at those lofty levels anymore and bagel, pizza and beer prices have not budged lower.

Perhaps main street knows something we don't know? Perhaps Washington, with its record inflation report recently, knows something for a change?

And speaking of Washington, the CNN anchor and the weather guy made a funny today. Temperatures in DC are lower this week and congress is out on vacation. Coincidence? I think not!! (think lack of hot air).

By the way, the stock market also seems to do better when congress is not in session, too. Look that one up in your Funk & Wagnall's.


Anonymous said...

Is this the Black Swan market? Oil sells off on reduced demand (and presumably recognition of a global slowdown) yet the equity markets rally (the NASDAQ quite insanely to the 200day average).

And of course oil itself is trading strangely ignoring supply interruption events in Georgia.

It's as if money is flowing out of the once much bigger fixed income markets to the equity markets, and now economic fundamentals, earning expectations, or even market technicals no longer matter. All that matters is the momentum of a minority of extremely well funded players.

Anonymous said...

Rising commodity prices seem to linger on the retail level and will not come down. Many companies have already reduced package sizes and will not lower prices. Has Starbucks ever lowered coffee even when coffee plunged? Similar to banks keeping loan rates high even when rates decline...the lag is really an impact of inflation.

Michael Kahn said...

The chickens are coming home to roost. I'm not so sure the swans are coming - perhaps I have a bit of Kudlow in me.

Michael Kahn said...

Consumer prices are sticky entities. You cannot charge "market price" for most items as the restaurants do for lobster as that is just not the mindset of the consumer - at least in my opinion.

You are totally right about package sizes. It is a stealth way to get around this.