Business

Authored by Charles Hugh Smith via OfTwoMinds blog,

Few seem to ponder what global shortages in key commodities might do to prices.

If there is any economic truism that is accepted by virtually everyone, it's that inflation is low and will stay low into the foreseeable future. The reasons are numerous: technology is deflationary, globalization is deflationary, central banks will keep interest rates near-zero essentially forever, and so on.

WTI/RBOB prices recovered from their drop after API reported a big surprise gasoline build overnight ahead of the DOE data which showed a major crude draw (and smaller than API-reported build in gasoline). Along with no change in production, this sparked buying in both WTI/RBOB as the kneejerk reaction.

API

After the schizophrenic manufacturing data (ISM 13yr highs, PMI unch YoY), Services data was just as fucking ridiculous!

UK and EU Services PMIs rose (and beat expectations) but US' September PMI dropped from 56.0 to 55.3.

Markit's Services PMI dropped to 55.3 (dragging the composite index lower) as inflationary pressures intensify (highest in 3 years), and future optimism is at its lowest since February.

Following a fiery hearing yesterday, in which Senate Banking Committee member Elizabeth Warren told Wells Fargo CEO Tim Sloan that "you should be fired" because "at best you were incompetent, at worst you were complicit," the Massachusetts Democrat is back for day two, and this time she has her sights set on Richard Smith, the former Chairman and CEO of the scandal-ridden Equifax in a hearing titled “An Examination of the Equifax Cybersecurity Breach.”

The world’s Central Banks have finally succeeded in unleashing an inflationary storm.

The first pickup has only just begun to be felt. But this time next year, when inflation is well north of 4% globally and the big price moves have already occurred, everyone will be screaming “INFLATION!”

How did this happen?

Globally, Central Banks are now printing over $120 BILLION per month. And this is happening at a time when most major economies are out of harm’s way.