On CAPEX, commodities, stagflation, and central banks
Stagflation is a mixture of slowing growth, high/steady unemployment, and high inflation. Some would say it’s absurd to mention something so harsh, citing central bank comments on the transitory nature of the recent uptick in inflation and the still notably high growth figures. But why so mad about using this term for the current state of the global economy?
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The Swedish central bank opted to look through the current uptick in inflation and to keep the base rate unchanged in 2022 and 2023. Higher CPI readings were the result of higher energy and food prices and supply chain disruptions. Till date there are little to no signs of second round effects, but wage growth figures will be crucially important. According to the Riksbank, Sweden is struggling with hiring issues (less demand for unskilled workers, more for skilled ones) that might lift real wage growth figures during the next few quarters.
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Mr. Powell might as well jump the gun
Jerome H. Powell is about to give a much-anticipated speech in Jackson Hole on Friday (27th Sept). He is going to talk about the central bank’s inflation framework, the current economic situation, and he is expected to set out the FED’s plans to end the era of quantitative easing. In other words: Mr. Powell is about to pop the everything-bubble.
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Bad times at Shenzhen
We have to get back to maritime reports again since it looks like port congestion will be one of the hottest topics this year. The map above shows the traffic routes of the Shenzhen region as well as the vessels in the area. Despite allegations that the south-Chinese port congestion was a non-issue it looks like ports are operating below 50% capacity.
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World Container Index
You’ve probably seen a dozen of these, this is a standard 40-ft container used for shipping almost everything. Freight cost benchmarking and maritime research Drewry publishes an index that tracks the cost of 8 major East – West shipping routes for these 40ft containers. It represents a composite price for container freight rates as well as surcharges as peak season fees, port fees etc. The World Container Index chart shows the index has passed USD 6000 this week. It was below USD 5000 last month and what is more important: it was quoted sub USD 2000 just a year ago. That is more that 300% price increase in just 12 months (during vaccine rollout). And now Chinese ports are being shut down again…
Primus EcoView April 2021 – Notes on Global Economy and Financial Markets
In this overview we share our macro and technical views about global economy and financial markets, and we try to give you some insight to our strategies and methods that we follow during our investment decisions. Just treat it as food for thoughts, and if you find something exciting in it, feel free to contact us for further detailed discussions.
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