Scouring the globe for news that does not matter to the high and mighty financiers of the world because Uncle Ben is on their side...
....what matters to the bottom 80% aka the proletariat
is not of concern. But it's still interesting to read about their tales of woe.... err... I mean their impending rebound during the 2nd half 2008 recovery. And one day stocks may care... but until then may I introduce our official blog mascot and also our future covergirl? (boy?) of the mutual fund prospectus. (you think I'm kidding) ---->
In this round of stories we'll focus on inflation - something every country in the world has but not us. As I keep repeating inflation cannot cross the Atlantic or Pacific Ocean nor the Canadian or Mexican border - therefore it is a problem every other country must deal with but not us. We are so lucky that way. But if inflation were real and not just something bloggers
like me make up in our over active imagination what would it look like...
Let's begin with shoes... yes shoes. Not that there is any inflation in the world, but if there was - it appears to have trickled down to even shoes, per the Wall Street Journal
. As I have been stating since last fall, we are moving from a global deflation environment to a global inflation environment - and those cheap Chinese goods are going to be incrementally increasing in cost. Until the global multinationals decide China is too expensive and its time to exploit Vietnamese labor.... err, I mean create a new middle class in Vietnam.
- The hottest trend in footwear this season? Inflation. (oooh, my favorite style!) After a decade of declining prices, footwear makers at all levels are raising prices.
- Brown Shoe Co., which makes Via Spiga and Buster Brown footwear and hasn't altered prices in years, plans an increase of 5% to 12% for fall. And the Nine West shoe label plans to boost prices on some styles by 15% next year.
- The moves reflect higher costs in China, which makes about 85% of shoes sold in the U.S., as well as higher fuel costs and the weak U.S. dollar. And they could presage price increases of other goods soon: Handbags, belts and other leather accessories are made in the same region in China.
- For retailers already struggling with a downturn in consumer spending, the higher costs couldn't come at a worse time. They fear the price increases will further damp shopping, forcing them to eventually slash prices to move merchandise and hurting their profit margins in the process. (but don't worry, buy retail stocks - they have been rocking and rolling lately because of the "early cycle recovery" story - that is, the US consumer is going to be rocking and rolling by this fall - don't you worry about facts; the hedge funds say buy retailers so you should buy retailers.)
- ..estimates that shoe makers will raise prices by an average of 10% to 15% in the next year, which would be the largest single-year increase in more than 50 years, according to the BLS. (once we move to "barefoot in the office" day, then we can say there is no inflation in shoes...)
Now the government has this thing I love to talk about called the substitution effect; put simply when the cost of steaks gets too high they assume you move down to hamburger - so they substitute steaks for hamburger in their measure (seriously) and hence inflation disappears. So in the government's eyes we are going to be a world of bicycle riding, barefoot, and beltless
(or using string to keep pants us) people. Because otherwise, inflation would go up.