Inflation (aka: gouging) has peaked . . . .

[errolanderson]

The fallout has begun . . .

Global commodity prices now coming under pressure. Even fertilizer took hit this past week, led by nitrogen declines. Copper wanes, gold and silver appear slipping back into a lower trading window. Natural gas breaking lower/ WTI crude appears to have key support around $93.50 per barrel. The housing market simply looks like a sitting duck by mid-summer in my view. Lumber has already broken. Used car prices sliding, to name a few . . . .

And equities, well, the collapse of Netflix may have been just the sound of the starter's pistol. FAANG stocks and cryptos, a lot of quiet investors right now.

Markets have a way to tame inflation on-their-own without the help of central bank dickering. Not a terrific time for central banks to threaten markets with rate hikes. Heavy price discounts coming. And cash on-the-sidelines may actually be king . . . .

[foragefarmer]

Major housing shortage in Canada and USA.

Prices may stabilize at best, pent up demand, new builds can't keep pace, and immigrants coming over. Not to mention investors gobbling it up.

You somehow didn't mention the invasion of Ukraine by Putin as being the big current driver of inflation world wide.

And just what do you think will happen to raw commodities and lumber when the world will have to rebuild Ukraine?

Did you forget about Ukraine or decide to leave it out of the equation?

[Taiga]

100% agree with you Errol, there will be big drops this year, this current inflation is rapidly consuming cash at an incredible pace. Have several large purchases planned but holding up, doubt I am alone. Ukraine is a smokeshow.

[FarmJunkie]

I can’t see things dropping too much. Production of grains is gonna trump anything else. If we don’t produce bigger crops than last year and I mean world wide we won’t see our costs drop a lot. The criminals are always one step ahead of us bottom feeders

[wheatking16]

To add to Errol's points...

I have a thesis that the recent rise in inflation is attributed to supply-chain issues rather than increased demand.

We are likely aware of the port backlogs inhibiting supply with the associated increases in supply.

Approx 500 ships waiting in Shanghai this past week.

Ships leaving with empty containers, etc.

I listened to a podcast the other day and learned that the US homeowner has withdrawn $413B from home equity and spent it.

It is gone.

It reminds me of a conversation with a banker who has wage-earning customers using the home equity to buy expensive rec vehicles.

XHB, the SPDR Homebuilders ETF has experienced a substantial retracement and appears to have further go.

While not devastating, it is not exactly healthy and will likely experience another 20-25% drop.

I will post the linear chart for dramatic effect.



Perhaps this foreshadows lower house prices.

Increased interest rates will certainly lower home values.

I understand that US mortgage payments have risen 38% in the past year or two.

We know that will result in lower home values.

So now the consumer has less disposable income and the value of their home is likely to drop with less equity to draw from.

This could lead to the demand destruction that Errol has been forecasting.

Grain is a bit of a different animal; however, I understand that China has an estimated 1.5 years of inventory.

If true, I anticipate this will be used to gain influence with other nations, primarily African.

Similar to what I believe was the primary focus of the CWB.

I have an idea of how food and resource security concerns will be addressed in the future.

That is a discussion for another time though.

[errolanderson]

Consumer demand destruction is now sweeping across many markets. The so-call housing shortage can turn into a buyer’s market within weeks as foreclosures pick up. Canada doesn’t have a housing shortage as promoted politicians and builders. Rather demand has been skewed by central bank policy, that has failed.

The housing market is now at the tail end of buyers rushing in to secure mortgages holding prices up artificially. Then this real estate bag will go pop when the piper has to be paid. It’s already in early stages.

[Sodbuster]

The central bank policy should ever of been allowed to drop rates to essentially 0% and because of that everyone will pay somehow. This policy is what allowed house and land prices to soar to unbelievable prices.

[jazz]

Inflation may peak, but it can stay at that level for a long time yet.

Whats the consumer going to do if inflation sits at 8% for the next year and the fed trying to cool it every couple months? Probably triggers a pretty good recession to reset it all. Thats how these things always end - never do they engineer a soft landing.

But the problem comes after that. What stimulus will they use to get the economy rolling again? The debt binge is tapped out in most western countries.

[Old Cowzilla]

Forget housing market the real money was made buying rock pickers 2 years ago !!!!!!! Immigration numbers are less than 1/2 since 2020 and did all those folks who passed away the last 2 years live in tents ? Numbers never seem to add up always see the places that build RTMS busy . Lots of for sale signs in town take your pick. Real Estate agents enjoying the 24 hr hype while cashing big cheques. Air b and b distorting market but for how long ?

[bucket]

The central bank policy should ever of been allowed to drop rates to essentially 0% and because of that everyone will pay somehow. This policy is what allowed house and land prices to soar to unbelievable prices.

Where does that leave guys that bought inflated land and increased interest and dropping commodity prices?


In the backroom of the lender getting a write down, while careful borrowers get a foreclosure notice.

History will repeat , the guys in the back rooms are good at what they do. The guy on the lending side is wet behind the ears.

I doubt there is one lending manager still in the business from the 1988 - mid 90s