Sunday, May 21, 2017
Tuesday, May 9, 2017
Devonshire: True Inflation Is Three Times Higher Than Officially Reported
From ZeroHedge:
Devonshire: True Inflation Is Three Times Higher Than Officially Reported
by Tyler Durden
May 9, 2017 5:13 PM
A fascinating, recent report by the Devonshire Research Group, whose recent work on Tesla was featured here one year ago, has moved beyond the micro and tackled on of the most controversial macroeconomic topic possible: what is the true rate of inflation. What it finds is that, like others before it most notably Shadowstats and Chapwood, the accepted definition of inflation, or CPI, is dramatically understated for various reasons, both political and economic.
For those unfamiliar with the "alternative" explanations of inflation measurement, and the implications if CPI is indeed drastically underestimating true inflation, the report is a real eye opener.
Devonshire sets the scene by noting that a wide variety of Price Indices are used to adjust for the effects of Inflation on the economy. These adjustments are widely applied to derive a number of common measures and underlie many critical economic and asset management concepts
- Price Indices: the Consumer Price Index (CPI), the Producer Price Index, the GDP Deflator
- Economic concepts: the Standard of Living, Real Income and Output, Real Economic Growth
- Asset Management concepts: Real Interest Rates, the Risk-Free Rate of Return, the Cost of Capital
These indices and concepts are intimately commingled which is leading to a wide ranging divergence between
reality, published government statistics and the assumptions used for investment decisions.
reality, published government statistics and the assumptions used for investment decisions.
As noted above, the reason why inflation measurement and reporting has become so controversial is that it is "less a measure of purchasing power (and therefore a financial tool), and increasingly a process of affecting macro-economic policies (and therefore a policy lever)." Just see Venezuela which recently stopped reporting inflation altogether to avoid rising social disorder and anger.
The report goes on to note that while in recent decades, transportation/energy components of prices have seen dramatic fluctuations as a result of oil crises, and subsidy programs, if one treats “transportation” and “other” as exceptional assets, and follow only US gov’t stats, the modern investment age has the feel of stability. In fact, viewed from a longer perspective, the rate of inflation, once volatile from year to year, “flattened” out to the “accepted” 3% / year
Saturday, May 6, 2017
Ford Truck Plant Layoffs Sign of Economic Slump?
From Wolf Street
What the Layoffs at Ford’s Medium-Duty Truck Plant Mean
by Wolf Richter •
Ford announced that it will lay off 130 hourly workers and eliminate one shift from May 8 until the end of September at its Ohio Truck Plant that makes medium-duty F-650 and F-750 trucks. They’re are used by businesses such as…
The F-Series medium-duty class 6 and class 7 trucks – just below the class 8 trucks you see hauling trailers across the country – are among Ford’s more profitable product lines.
They’re an expression of business capital expenditures. They’re considered a gauge of economic activity in the US. Demand had been strong, unlike demand for class 8 trucks which had gotten mauled by the transportation recession and for which orders had plunged in late 2015 and much of 2016. But now, it’s demand for Ford’s medium-duty trucks that is slumping.
The Ohio Truck Plant, which has produced 4,856 F-650 and F-750 trucks so far this year, employs about 1,600 hourly workers, Ford spokeswoman Kelli Felker said. It also builds the E-series cutaway vans.
Last year, the plant became “politically important,” as the Automotive News put it:
Ford blamed the demand problem on the planned launch of the new series of F-650 and F-750 trucks in September, and so, it said, companies are delaying purchases at the end of the product life cycle of the current series.
“We expect demand to pick back up again in September,” explained Ford spokeswoman Kelli Felker. “Some fleets are waiting to place their order until the new model year.”
But that may only be “some fleets,” as she said. She may be just trying to put a positive spin on it. If a company really needs to buy trucks to meet its business requirements, it doesn’t make sense to wait until a new series comes out.
Read the rest of the article here:
What the Layoffs at Ford’s Medium-Duty Truck Plant Mean
by Wolf Richter •
Demand from businesses in the real economy is slumping.
These particular layoffs aren’t happening because consumers are strung out and have trouble getting financing or are switching down to used vehicles or whatever. They’re happening because demand from commercial customers that ply their trade in the real economy is slumping.Ford announced that it will lay off 130 hourly workers and eliminate one shift from May 8 until the end of September at its Ohio Truck Plant that makes medium-duty F-650 and F-750 trucks. They’re are used by businesses such as…
Dump-truck operators…
Companies that operate cargo box trucks
Companies that need boom and bucket trucks, such as utilities…
These trucks are used by construction contractors, oil field companies, and myriad of other types of businesses that ply their trade in the real economy.
The F-Series medium-duty class 6 and class 7 trucks – just below the class 8 trucks you see hauling trailers across the country – are among Ford’s more profitable product lines.
They’re an expression of business capital expenditures. They’re considered a gauge of economic activity in the US. Demand had been strong, unlike demand for class 8 trucks which had gotten mauled by the transportation recession and for which orders had plunged in late 2015 and much of 2016. But now, it’s demand for Ford’s medium-duty trucks that is slumping.
The Ohio Truck Plant, which has produced 4,856 F-650 and F-750 trucks so far this year, employs about 1,600 hourly workers, Ford spokeswoman Kelli Felker said. It also builds the E-series cutaway vans.
Last year, the plant became “politically important,” as the Automotive News put it:
Ford moved production of the trucks to Ohio from Mexico in August 2015 as a result of the 2011 labor contract with the UAW. The move made headlines last year during the presidential campaign as then-candidate Donald Trump berated Ford and other automakers for moving some vehicle production to Mexico.Most of the layoffs will be voluntary, Ford said. Employees with at least one year seniority will receive about 75% of their pay while on leave.
Ford blamed the demand problem on the planned launch of the new series of F-650 and F-750 trucks in September, and so, it said, companies are delaying purchases at the end of the product life cycle of the current series.
“We expect demand to pick back up again in September,” explained Ford spokeswoman Kelli Felker. “Some fleets are waiting to place their order until the new model year.”
But that may only be “some fleets,” as she said. She may be just trying to put a positive spin on it. If a company really needs to buy trucks to meet its business requirements, it doesn’t make sense to wait until a new series comes out.
Read the rest of the article here:
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