EYE ON COMMODITIES - Higher Chicken prices

High Corn Prices = Less Capacity = Higher Chicken Prices

Sanderson Farms (SAFM) is delaying construction of a North Carolina poultry complex due to escalating prices of corn and soybean meal.

Taking a political shot at the Washington crowd the company said A third of the United States corn crop is now expected to be used to produce ethanol, the poultry industry and other animal feeders are being challenged by increasingly tighter supplies of grain and historically high prices.

Vietnam's Inflation Rocket...

Just because facts are ignored, does not mean they cease to exist. Now Wall Street is faced with the realities of inflation being a global problem. Vietnam was foreshadowing this for some time now, and their stock market has been crushed as a result.

To say that "its global this time" but to ignore that there could be negative implications associated with that reality, is analytically irresponsible.

Vietnam's inflation rate for the month of June, which is one of the only June reports we have in hand other than India's, shot higher again to +26.8% year over year.

Particularly when it comes to basic consumption demand (oil, rice, corn, etc...), analysts have to agree that the global marketplace is as interconnected as it has ever been.

Belgian Inflation Spikes to a 24 Year High

Belgium released their inflation report for May at +5.8% year over year. This was a 24 year high and resulted in the Belgium Stock Index dropping another -3% in European trading.

Stagflation induced stock market weakness is not a new "Trend" in Europe, particularly in Belgium, where stocks are now -28% from their October 2007 "its global this time" highs.

The European central bankers have inflation as their explicit #1 priority right now. The facts bear out on their side of the analysis, not on the US Federal Reserve's.


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Volatility (VIX) climbing, and concerning

The VIX has shot up another +8.4% so far this morning, to 22.92. Bearishness is morphing its way into consensus, but until I see VIX readings of at least 30-32, I'll argue we have not seeing the required capitulation washeout.

Wall Street (NYC) Employment Chart...

My Partner, Brian McGough, posted this chart the other day. Is this picture likely to change any time soon?

Jobless Stagflation ...

The weekly jobless number of 384,000 confirms the real time "Trend" that is developing right now and that's quite simply that unemployment in the US is no longer going down, its going up. This is not good for growth, and adds to my conviction in the "stag" part of the stagflation thesis.

The 4 week moving average of claims now stands at 378,000, and this is the highest reading of the year. Within the framework of my US Consumer is "RIPTE" model (Regulation, Inflation, Protectionism, Taxes, and Employment), this trend in US employment is going to amplify the political pressures implied within the rest of the oncoming RIPTE consumer spending winds.



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