How much longer will this bear market go on for?

Prism

I would say its mostly lockdown related. Last year building supplies shot up due to lack of imported materials and larger demand from people wanted to spend their saved cash on home improvements. A bunch of energy providers went bust because gas and oil had shot up due to reopening and a rubbish summer for solar and wind generators. This years war seems to have made things worse.

MK62

Type_45 said:

The cause of the inflation appears to be largely due to supply-side issues relating to the response to Covid.

So inflation is due to neither Covid itself nor money printing.  But the latter is certainly exacerbating the problem.


It's for the reason that inflation is due to supply issues that raising rates won't solve the problem.


Hence we are in this situation due to twin policy errors:  1) the response to Covid and 2) the tightening of money.


There are other issues since which have poured petrol on the dumpster fire.

There isn't a lot the government can currently do about the external factors partly driving inflation, but raising interest rates will dampen overall demand a little - a key factor in attempting to balance the supply side problems. It can be a blunt instrument though, and will doubtless cause pain to some....... unfortunately there aren't many effective alternatives atm....

Type_45

Prism said:

I would say its mostly lockdown related. Last year building supplies shot up due to lack of imported materials and larger demand from people wanted to spend their saved cash on home improvements. A bunch of energy providers went bust because gas and oil had shot up due to reopening and a rubbish summer for solar and wind generators. This years war seems to have made things worse.

Inflation in the US was 7.5%, and on an upwards trajectory, before Ukraine was invaded.  It's since added another 2% or so.  

Politicians will tell you that the current inflation is "Putin inflation".  It's entirely up to the listener to believe or not that they are being told the truth.

Linton

Type_45 said:

masonic said:

I'd say the main driver is the war in Ukraine (food, energy), and a secondary factor is China's continued zero Covid policy and lockdowns (other goods).

Switch off CNBC and Biden's pressers.

Why are you so fixated on US economic data and Biden? And odd that the graph stops in Feb 22 before the effects of the Ukraine invasion would have been evident. .

The Russian invasion of Ukraine was well flagged months before it actually happened with oil prices rising from October 2021.  In that light the graph shows quite nicely US inflation rising with the post covid supply problems reaching a plateau in mid 2021  and rising again in the 3rd quarter 2021.

In any case these graphs based on monthly values of annual inflation are very misleading for short time periods.  A stepchange in say January followed by constant prices will appear in the graphs for the following 12 months as a period of high inflation and then will suddenly drop the following January.

To see what I mean look at the CPIH monthly inflation data for the UK:



A steady 10% rise in prices ofver 1 year corresponds to 0.08% on the graph 
So despite the shock horror headlines at the moment I see no evidence in this data of an on-going rapidly rising inflation rate.  Inflation was roughly constant to March 2021 after when it increased, but dropped off towards January 2022.  There was a large spike February-April 2022 corresponding to the Ukraine invasion but since then the monthly inflation rate has fallen.  But it's far too early to come to any definite conclusions, we will have to wait to see what happens during the next few months.

Type_45

Linton said:

Type_45 said:

masonic said:

I'd say the main driver is the war in Ukraine (food, energy), and a secondary factor is China's continued zero Covid policy and lockdowns (other goods).

Switch off CNBC and Biden's pressers.

Why are you so fixated on US economic data and Biden? And odd that the graph stops in Feb 22 before the effects of the Ukraine invasion would have been evident. .

The Russian invasion of Ukraine was well flagged months before it actually happened with oil prices rising from October 2021.  

The US is the world's largest economy.  Biden is apparently in charge of it and is on record as blaming inflation on Putin. 

The graph I showed illustrates that Biden is not telling the truth by blaming inflation on the Ukraine war.  The graph ends in February 2022 because that's when the graph was created.

The invasion of Ukraine was not "flagged months before".  Oil was rising in 2021 due to the world's economy re-opening.

phillw

Type_45 said:
The US is the world's largest economy.  Biden is apparently in charge of it and is on record as blaming inflation on Putin. 

The graph I showed illustrates that Biden is not telling the truth by blaming inflation on the Ukraine war.  The graph ends in February 2022 because that's when the graph was created.

Biden isn't blaming "inflation" on Russia's invasion of Ukraine. He is blaming the rise in oil price that occurred after Russia's invasion of Ukraine, on Russia. Putin timed the attack at a time when oil prices were rising, hoping that everyone would keep their mouths shut. The prices have certainly increased further because of the Russian invasion.

He has blamed Inflation on other things too though.

Malthusian

Type_45 said:

Inflation in the US was 7.5%, and on an upwards trajectory, before Ukraine was invaded.  It's since added another 2% or so.  

Politicians will tell you that the current inflation is "Putin inflation".  It's entirely up to the listener to believe or not that they are being told the truth.

I for one would be quite happy to call it "lockdown inflation", but that seems to be unpopular for "truth and reconciliation" reasons.

I.e. the lockdownists refuse to acknowledge that lockdown might have had some undesirable consequences and the covidiots are far too happy that it's now a historic non-issue to argue with them. Instead, half the country call it "Tory inflation" (or Biden inflation), the other half call it "Putin inflation", and everybody's happy.

DoublePolaroid

Type_45 said:

The invasion of Ukraine was not "flagged months before".  

Absolutely correct. It was flagged nearly a year before.

"Russia-Ukraine crisis could explode into war in days as UK commanders on 'high alert'" - April 2021

https://www.mirror.co.uk/news/uk-news/russia-ukraine-crisis-could-explode-23879639

   

Type_45

$7.7 trillion of real estate exposure by China’s banks… at the exact moment sales are plunging, valuations are collapsing, buyers are fleeing.

People have been waiting for Evergrande to collapse since October 2021. When it goes down look out below. 

https://www.bloomberg.com/news/videos/2022-08-01/china-evergrande-falls-short-of-promised-restructuring-plan

Type_45

Malthusian said:

Type_45 said:

Inflation in the US was 7.5%, and on an upwards trajectory, before Ukraine was invaded.  It's since added another 2% or so.  

Politicians will tell you that the current inflation is "Putin inflation".  It's entirely up to the listener to believe or not that they are being told the truth.

I for one would be quite happy to call it "lockdown inflation", but that seems to be unpopular for "truth and reconciliation" reasons.

I.e. the lockdownists refuse to acknowledge that lockdown might have had some undesirable consequences and the covidiots are far too happy that it's now a historic non-issue to argue with them. Instead, half the country call it "Tory inflation" (or Biden inflation), the other half call it "Putin inflation", and everybody's happy.

Don't forget Brexit.