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Postcards from the florida republic
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Inflation hit the Baldwin household hard this time.
This week, my daughter received a “KiwiCo” box, a monthly subscription service that teaches children scientific- and nature-based lessons.
In previous months, we made cars and learned about tire treads. In other months, we’ve made volcanoes from baking soda, food coloring, and vinegar.
My daughter loves these kits. I don’t even look at the subscription cost.
Whenever they arrive in the mail, she begs me to stop everything I’m doing: "It’s time to do the Kellen Box.”
One recent KiwiCo box’s “academic subject” was right in my wheelhouse.
We would create a fruit and vegetable stand.
The KiwiCo box had a kit to make stuffed carrots (two of each), peas (3x), corn (2x), and tomatoes (2x).
Each fruit and vegetable group came with a basket and a small chalkboard.
She could write the name of the food on the chalkboard and set a price for a “play grocery store.”
And what an economics lesson we learned on inflation...
Now, I don’t think my daughter listens to me talk about inflation.
My wife and I discuss it at dinner whenever the CPI or PPI numbers come out, or Jerome Powell speaks.
Naturally, inflation has impacted everything we buy... what we don’t... how we save... and how we invest.
And if you think inflation is bad at your local grocery store...
My daughter’s fruit and vegetable stand prices are freaking outrageous.
She listed $9, $10, and $11 for corn, peas, and carrots.
Then, when she got to the tomatoes, she asked: “How do I make an ‘infinity?’"
My wife had said the word moments prior after seeing the first three prices, and my daughter also knew it from Buzz Lightyear. So that would become the price of the tomatoes.
But like all inflationary spirals, it got worse.
When we did play grocery store a few minutes later, she stuck to her insane prices.
My play “Kiwi bucks” – which are pegged to the dollar - couldn't cover the grocery bill in total.
Thanks a lot, Jerome Powell!
Don’t Lose Sleep
Today’s headline comes from Yahoo! Finance. It appears that more Americans are losing sleep over their financial conditions.
Credit card debt has just surged above $1 trillion.
We’re about to resume payments on the $2 trillion in student loan debt fueled by our government.
I can understand the feeling of uncertainty around one’s financial condition, the future, expected opportunities, and questions about what an organization’s leadership is doing.
But the last thing people need is to lose sleep.
It is a commodity that I cherish greatly. I talked about the importance of sleep yesterday. Stay away from Ambien.
Inflation in Focus This Week
This week, the Consumer Price Index (CPI) arrives. After months of “disinflation,” we must now face the threat of rising inflation.
Remember, the bulk of inflation experienced in 2022 happened over the first six months. We could see a year-over-year bump that takes inflation back to, dare I say, north of 5%.
Those are basic statistics. I can imagine a market panic.
All that matters today is that momentum is positive, but we’ve seen a breakdown in buying and an increase in selling over the last three days.
That’s a warning sign.
I still predict that we hit 6% on interest rates. I’m alone on this particular terminal-rate island, but I'll live off coconuts and Absolut Citron if I must.
If CPI is higher than expected, this could be the selloff we have been awaiting. Again, we have a signal. We pay attention to the signal. You will GET THIS SIGNAL FOR FREE.
Global liquidity is already tightening. That’s probably why a sitting Senator on the Finance Committee shorted the Nasdaq 100 on July 13, as the Chinese central bank tightened. Just saying…
Fear may kick in. But we don’t move until we must.
Stay positive,
Garrett Baldwin
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.