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The financial media, Wall Street, and Washington politicians want you to believe them, and not what you are experiencing in your daily lives. Years ago, someone told me, "the bigger the lie, the more people will believe it".
Unlike CNBC, I am not an entertainer. Yes, I know, there is a lot more money in entertainment than in cold hard facts. I have to apologize, I never have been very good at small talk, and at parties, while not shy, I'm just not a good BS'er.
Here is the truth. We have an inflation problem, and it is a big one.
For some reason, over the last two days, Bernanke, and others are coming out and saying inflation is a concern. A concern? You have got to be kidding me! Inflation is a huge problem.
The biggest culprits of inflation are commodity and energy prices. The biggest drivers of these prices increases are China and India. Higher prices for commodities and energy are causing labor costs (plumbers, electricians, roofers, builders) to soar, as well as the prices we pay for food in the grocery stores and restaurants.
To convince us that there is no inflation, the government data on inflation uses the expression, "excluding food and energy (otherwise known as the core number), inflation is well contained". This is nothing more than a smoke screen for the truth.
This morning, Panera Bread (PNRA) warned, and said profits and sales suffered "due to higher fuel costs". I like Panera, and I am going to be buying the stock on this pullback. Panera is affordable, and very good.
My family and I went out to eat at Carrabba's Italian Grill (owned by Outback-OSI), and I noticed that they had changed the menu to raise prices for the second time in 12 months. Increased food costs are being passed along to the consumer. But of course, "excluding food and energy, inflation is well contained".
I don't know about you, but I am highly insulted with the lies about inflation. We are not suffering financially, but we don't go to restaurants (higher priced- Carrabba's, Outback, etc) as often as we use to because paying $70 for a meal does not make a lot of sense.
Oh, by the way, my baby-back ribs on the grill are Mm, Mm Good, and my wife adds the coleslaw and baked beans. Total cost: $30 bucks, with leftovers to boot.
Some on Wall Street wanted us to believe that interest rates were going to come down and housing had bottomed. Oh, really?
This morning I saw where Lowe's (LOW) President & COO Larry Stone sold over half his stock holdings. If Larry thought that housing had bottomed, do you really think he would have unloaded 268,732 shares of stock? As greedy as most CEO's are today, I don't think that would have happened.
It will be interesting to see what kind of sell-off this market mounts. If Hank Paulsen, and the Plunge Protection Team (PPT.. aka the President's Working Group on Financial Markets) continues to intervene, we probably will not see a drop on the Dow below 12,800. If they didn't intervene at all, we may be looking at 10,800.
I will be away from my office on Thursday and Friday. I hope you have a great week, and I'll report to you again in the weekly newsletter update.
