Another Inflection on Inflation & Crypto.

hey folks in this video we're going to

talk a little bit about inflation higher

inflation that we're seeing and some of

the latest inflection points in

inflation and inflation expectations i

do think what you're going to see here

is potentially a little bit of a

lead into what we might expect to see

wednesday and as a result it's possible

that we're going to see a little bit of

a bump in crypto pricing we'll see

i did increase my position in ethereum

just yesterday

uh when we were sitting around the high

24 or sorry 34 level in

ethereum and i'm not opposed to adding a

little bit more with cash that i just

have on the sidelines sitting in my

coinbase account as as we see some of

these catalysts draw near but of course

wednesday's gonna be a big day so anyway

let's get into some of the

sort of prefaces that we're seeing to

what's coming wednesday right now take a

look at this so we've been thinking that

used car prices would inflict downwards

and and they have but they started

coming up again now they didn't

originally go back to their may pricing

when we last looked at this manheim

vehicle index which is an index that

tracks used car prices as of uh last

week is when we last looked at this

index and we thought okay all right so

there's an inflection back to the upside

in the manheim used vehicle index but

that's okay you know so it came back up

a little bit it's not going to keep

going is it

well look at the look at the chart right

now so here's your may pricing this was

sort of that inflection point to the

downside in the shelf we hit the used

vehicle index as of today is now

actually a chunk above

where we were in may in may we had a

reading of two of three coming in now at

almost 205

which is incredible because we were

expecting this to rotate to the downside

now right now that is only a percent but

the chart gives us an idea of

of potentially this inflection point

again in the market where

we do see uh prices that that came down

temporarily as expected but then as not

expected

uh are or skyrocketing back up and

that's not good now let's take a look at

lumber just as another example here ta

yeah take a look at this wow

uh the lbs now uh back over 700 almost

back to 725 this is lumber

if we zoom out to the sixth month we'll

see this massive plummet in lumber

prices but it's really not until when

you go out to a year

or even the five year chart that you see

this incredible

spike here with the pandemic

yeah the pandemic uh i would say let's

see recession let's see if we can find

it so recession's right here where my

mouse is where we went from lumber

prices of about 446

down to about 300. lumber prices then

proceeded to skyrocket uh excessively to

about almost 1600

and that has substantially fallen since

in the last six months here but which

was just drop was expected

the drop is definitely expected however

what again is not expected is the fact

that look at the last month here folks

we've been straight up in lumber prices

again and this is the danger that we're

facing right now is we're facing this

this scenario where golly we thought

prices were going to go down

they started going down everything

started suggesting that uh central

bankers were right inflation was

temporary uh everything was going to be

transitory uh the re there were going to

be two big sort of bouts of inflation

there was going to be one when we

compared base effects that was going to

be uh april may june sort of data that

came in and that's comparing to the

whole of the prior year to see a

year-over-year boost in numbers

and then the second was going to be the

reopening that we would see a surge in

spending at reopening but then we would

see a subsequent slowdown and we

actually did we saw a surge in spending

this summer

and then as we started seeing delta come

back we actually saw a slowdown in

consumer mobility in in spending

consumer spending consumer confidence

everything really rotated back to the

dark side around the end of august uh

how uh the end of july to the end of

august however as delta has vastly

dissipated

we're again seeing somewhat of a

resurgence and now we're seeing flight

cancellations uh supply chains

stressed more than ever before

things aren't getting better and some in

many cases they're getting worse

shipping time frames and freight time

frames are worse than expected

you look at the port of los angeles

usually has one docked uh freight ship

now has uh somewhere around 80 docked

freight chips waiting to be unloaded

all of these things are driving prices

up and again we're seeing this

inflection here in not just lumber but

in

the used vehicle index

aluminums also at an all-time high right

now it's somewhat unbelievable how

persistent

the inflationary powers have been

and uh earnings are going to reflect

pain because of this and i think this is

why you are starting to get some more

downgrades as well before we head into

the earnings cycle as uh institutions

try to sort of call the uh the

inflection to the downside so they can

show that oh we're right but anyway

uh so uh yeah it's it's it's gonna be a

big issue that we're gonna have to pay

attention to or the inflationary fears

now i will say the the markets are

surprisingly resilient in how they're

pricing inflation if we go to the

10-year

treasury bond and we look for rates

we can oftentimes see this as a little

bit of a forecast of what the market

thinks inflation is going to do

and what was very interesting was we

spent some time kind of stuck at about

150 to 155

and there were a lot of forecasters

suggesting okay we're not going to go

back to that 172 or whatever that we had

previously uh we're just going to level

out by one five to one five five and

that always seems like it's an argument

of forecasters

is that oh if things are going wrong

don't worry it's it's uh it's just

leveling out it's just temporary yeah

well now we're at 1.61

let's see what the 10-year break even is

doing 10-year break even treasury rate

so 10-year break even nice way to to

also look at

what's happening in terms of inflation

expectations and basically as the sin

flex up inflation expectations are going

up

so

take a look at this right here you've

been pretty flat here on the bond market

uh

really from

april through about september you've

been relatively flat with the exception

of a little pop here in may and of

course we're going into the beginning of

the year we saw a nice rise here in the

10-year break-even rates we're finally

starting to see an inflection up again

in in how this is being priced and when

you see it's a little easier to see it

here you can kind of see this little

trajectory here since about september

22nd where the 10-year break even's

moving up again

and if i zoom in a little bit more

recently here since the 22nd you could

really see this nice move to the upside

here and again this is the and here's

may and again this is the 10 year break

even which tends to be a little bit of a

forecast for what the market believes

inflation is going to do

and we are getting a very similar may

ask style push

which it's worth noting that in may

we had some pain uh in in the markets

some stocks dramatically oversold uh for

example take uh take a company like end

phase

that in may sold down to as low as about

108 120

as opposed to to really trading mostly

sideways

around that 150 is where we've kind of

been

and uh and and this was actually such a

low sell-off that you had uh the company

itself buying a chairs back as i saw it

as uh relatively oversold

so which ended up of course being a wise

play but uh look it's it's everything

and and now folks are even suggesting

that biden's vaccine mandates

for companies with over 100 employees

are going to lead to even more worker

shortages more labor shortages a lower

labor force participation rate and more

service based price inflation which one

of the big fears for inflation is

service based pricing

so we'll have to keep an eye on that as

well service based pricing and rents are

going to be two of major

major factors that uh that lead

inflation to potentially inflect up plus

of course

uh some of our ogs like car prices which

we've seen car prices now move up here's

actually a comment we'll throw it up on

screen here this is an interesting

comment it's sort of uh

piggybacks off of my talk about a lot of

folks getting their flights cancelled

this weekend southwest having about 70

uh 20 sorry 27 of their flights canceled

on on this sick out movement where

people are calling in sick in protest to

vaccine mandates here's a comment both

of my parents work for the airlines i

think it's funny if people in the

industry say the airlines

american delta and regional air traffic

controllers are planning more sick outs

before they're laid off for no vaccines

half of pilots are ex-military something

to think about

yeah that's incredible

so uh

let's see here here's uh so for example

some other comments here in the chat i

would quit my job before i ceded to a

vaccine mandate

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