Sometimes It depends on how you look at things

[sidewinder]

Sometimes this just aren’t necessarily as they appear.  I went over to the zero hedge site to view the article YC posted about in the   There is No Putting this Cat Back in the Bag

http://www.zerohedge.com/article/mike-krieger-deconstructs-commodity-inflation-you-aint-seen-nothing-yet

While I can’t say I disagree with the point of the article I will have to say the way Mike Krieger offers charts as proof of the inflation just might be misleading.  

I say that because I’m a curious guy and if I have learned anything from blindly following Dines a few years ago, it is, check behind anyone saying anything which may influence your investment decisions.  So I pulled up the same charts Krieger used to bolster his position of impending doom/inflation scenario.  What I got was a little different look at the charts.

Now, as I said I am not in disagreement about some impending inflation but browsing over the charts depicted on the zero hedge site made it look like everything was running away and I had better rush out and buy a truck load of food. These charts are scary.  I mean Cattle, hogs, corn, soybeans appear to be leaping off the chart.  However, I noticed the charts all stared around January 13th 2010 and ran 1 year to the present.  Here is the Corn chart; Scary ain't it



I pulled up a 1 year corn chart to have a look for myself and on a 1 year view of the daily corn prices I got pretty much the same view.  This is my one year corn chart. Mine's even more scary looking but I assure you it's the same chart.



In my chart analysis I never look at just one time frame.  In fact when looking at anything for the first time I always look at the longest timeframes first.  This way by looking at a monthly view for several years back I can quickly see where the stock or whatever has been in the past and how it reacts.  Then, I will “zoom” in on shorter time frames so as not to let any particular period bias my view on the stock.  Ionly want to see “technically” not out of some predisposition or other thing which might skew the “truth”.

When I pulled up these corn futures charts I immediately laughed  at the situation.  As you can see from the chart below corn was much higher in 2008 than what we see now and in addition corn seems to be following the rest of the markets in the recovery from lows back in 2009.  The other charts posted in the article were about identical in this respect.  It takes a while for me to capture, scale, and post on tinypic so I can upload these to you so you will just have to trust me about that as I see no further reason to go through all the trouble to post multiple charts. They all had similar patterns. Soybeans, cattle, hogs and the rest.

 


 This point in all this is that the author only showed the portion of the charts which supported his assertions of massive inflation, right now, Can’t put the cat back into the bag, the world is about to starve article. I am not saying he did this intentionally to pump his position.  It is even likely he just took one look at the daily for 1 year and went "shit this is really, really bad" and proceed to write the article based on the bias he acquired from that one chart. Nonetheless, I am sure thousands of readers are more inclined to purchase the "survival things" and hunker down in their basements filled with canned and dry goods, sitting atop their stashes of gold and silver.

Just looking over the past 3 years I see drop of around 59% in corn since the peak in 2008.  I see that it has reached a bottom and has rebounded around 109% from that low.  That is well and fine but it will have to recover about 160% just to reach the previous high so technically, and normally corn has a ways to go up to simply respond normally.  Nothing to see here folks keep moving.  

Granted 2008 led us right into the collapse and we my indeed be heading in that direction.  Now, consider that I would suspect the dollar is worth less that it was in our heyday 2008 to what price would corn have to move just to be equal with past prices.  Inflation in one respect is just another thing keep the same intrinsic value.  So again, it all depends on how you look at anything as to what it should tell you.  

I will reassert that I don’t disagree with the concept of big time inflation just ahead for us I just see no sense in getting excited about those charts as depicted.  The sky is not falling just yet but some are making a good living out of the concept.  Y’all be careful out there ya hear.

[pinetree]

Ha!  ZH drives me crazy.  They have had some interesting stories but many of their articles seem overly sensationalized to me.

[sidewinder]

Well, the internet can be entertaining and informative but this stuff is just like all the shit I see about Obama, Bush or 9-11.

 People with a good and likely valid point overstep the bounds of reality and truth  to further their position.  While most of these things are bad enough on their own merit, to present half truths, questionable information, or in some cases 10/ten points of absolute, irrefutable truth and then add 1/one outlandish, total BS, fabricated statement ruins the entire thing, confounds and confuses the reader which will lead to no one believing anything anyone says via this medium. 

You are right PT some of the crap I get in emails about puts me 'round the bend.  And the people that send me this crap are in real life reasonable, intelligent, highly qualified people.  you just have to wonder what happens to their brain once they log onto the internet.  I have some that forward everything they get in their inbox and they do it religiously as though their life depend on completing the mission.   The first ones I delete without looking have some "haint" attached to them as though my failure to "keep it up" will result in some child dieing or even myself getting a curse or bad luck. 

Anyone doing this .......  realize that your friends are talking about you behind your back and I have never come across ANYONE that doesn't bitch about it including the perps. 

OK rant over 

[yeocokent]

Sidewinder, I had a friend that bombarded me with all the left wing conspiracy theory "forward this to everyone" emails.  I responded in kind.  Every time he sent me a left winger stupid conspiracy email, I responded by sending him a right winger stupid conspiracy email.  This went on for about a year.  He finally concluded that both parties are corrupt and crazy and stopped sending them to me.

Regarding the original post, this is a good observation.  You can hit these charts at different time periods to prove different things if you want.  I am an Agricultural Economist by training and follow commodity markets quite closely.  When the prices spiked a couple of years ago, the repercussions were that the poultry integrators got nailed with high feed prices.  Hence, they lowered production.  Same with the swine guys.  In fact, the high feed prices helped drive Pilgrims Pride bankrupt. They were the largest poultry company at the time.  Funny how they didn't get bailed out by the government.  I have read a ton of analyses for the reasons of the high prices.  Some blame ethanol, some blame speculators, some blame the strength of the dollar, some blame oil, and yet some blame increasing global demand.  To be honest I think it is a mix of them all.


One item I think is pretty certain, we will be seeing higher commodity prices from here on out.  I read some analyses where an economist with USDA had a charted corn prices back to the 30's.  When you hit the 70's, the commodity prices peaked, and then dropped but never dropped back to where they historically were.  A new floor was established.  It appears that is where we are now.  One very strong demand variable is the growing population in Asia.  More importantly, the growing middle class in Asia.  Many of those very populous nations do not have enough arable land to meet their food needs.  Indonesia, is probably the most extreme case.  As incomes rise one of the first things that people do is increase their consumption of meat, unless their religion dictates against that.  This of course, increases demand for feed ingredients.  

[sidewinder]

Yea, like I've been telling my family for the last year or so..... Things you don't need, the "stuff", the junk will be had at bargain prices;  the things you can't do without are going to go up and up and............ up some more so get ready for it.  Wholesalers and retailers are camouflaging it with smaller portions, same packaging and charging the same price.  Now they are increasing the price on the smaller portions so it will translate to much higher prices in food, fuel, and the other things necessary to just "do life".  Meanwhile an iphone and iPad in every pot. 

[MetalMeister]

This is soooo funny!

http://www.youtube.com/watch?v=Li0no7O9zmE

[sidewinder]

Laughing out loud at that on M..............  Got to maintain that humor.

[sunseeker]

This is soooo funny!

http://www.youtube.com/watch?v=Li0no7O9zmE

Hi MM
I'll second SW's post.......
Humorous with a simple to grasp message. You can't beat that format.


That's a real gem you've come up there.

ATB

[sunseeker]

Peter Schiff lays it on the line.
When the U$D ceases to be the world's reserve currency/the world wakes up...

http://www.youtube.com/watch?feature=player_embedded&v=5EYVss0i83s

ATB