Liberal Forum

Blackvegetable » 28 Jun 2022, 9:54 am » wrote: ↑

28 Jun 2022, 9:54 am

https://finance.yahoo.com/news/inflatio ... 22403.html

It “increasingly looks like markets mistook [the] 'bullwhip' effect of supply chain (including food) for secular inflation,” Tom Lee, Fundstrat’s head of research, wrote in a note Sunday.

 The “bullwhip effect” describes, roughly, the tendency of businesses to over- or under-estimate the amount of inventory they will need relative to consumer demand, resulting in volatility in orders across the supply chain.

 In the case of the past year, retailers over-estimated, leading them to broadly over-order from wholesalers, who then in turn over-ordered from their own suppliers – leading, in aggregate, to a major mismatch between consumers’ actual demand and inventories on hand. The bloated inventory levels at Walmart (WMT), Target (TGT), Gaps (GPS) and other retailers this past earnings season served as recent examples of how this effect played out in real-time.

 “I do not believe companies want to permanently carry higher inventory. It is expensive … and introduces huge balance sheet risk,” Lee said. “Thus, companies will want to trim inventories when supply visibility improves. The logical implication, for me, is prices will come down.”

Blessed are we, Master Vegetable, to live in your era....Huzzah!

That's nice.  Here is what the consumer/voter cares about:

Inflation Hits July 4 Cookouts With Food Prices Up as Much as 36%

(Bloomberg) -- Add Fourth of July cookouts to the list of what Americans will pay more for this year — a lot more.

Ground beef prices are up 36% from a year ago, while chicken breasts gained by a third, according to a survey from the American Farm Bureau Federation. Overall, revelers can expect to spend 17% more on food for a barbecue, marking the biggest increase since the lobbying organization began tracking data a decade ago.

In 2021, the cost of an Independence Day cookout declined by less than 1%, according to the group. But much has changed since then. Costs for fuel, labor and key farming inputs like fertilizer have soared. Russia’s invasion of Ukraine has worsened the situation by disrupting global agriculture supply chains, according to Roger Cryan, chief economist for the Farm Bureau.

Paying more for burgers and lemonade (up 22%) hits just as one measure of US consumer sentiment fell to an all-time low. How that will impact spending remains to be seen, but the shoppers did pull back in May, and there are more predictions of a looming recession.  However, not all foods in the survey saw big jumps in price. Strawberries sank 16% and sliced cheese fell 13%.

https://finance.yahoo.com/news/inflatio ... 15381.html

At least you can't argue with the sources.  Yahoo reprinting a BLOOMBERG article.  One of your primary sources.