Deeeflation
I like to send inflation bulls articles demonstrating that we are in a deflationary spiral. Case in point, WSJ article Wal-Mart Sharpens Its Pricing Pincers.
It says, "Wal-Mart appears ready for an offensive that could hobble rivals' hopes for a sharp profit rebound. [...] Wal-Mart Chief Executive Mike Duke told [the WSJ] he expects gross margins to be more stable. That could mean the company will cut prices faster and put more cheap products on its shelves."
The article also notes, "J.P. Morgan's Charles Grom says prices of identical baskets of 31 products have fallen 14.4% between January and September at Kroger, while Safeway has seen a 9.7% decline. Wal-Mart, meanwhile, has only lowered prices by 2.6%."
Wow! No inflation at all!
Note that sentiment heavily favors inflation. "Though the widely watched consumer-price index was down 1.5% in the 12 months through August, in blogs, newsletters, online chat rooms and elsewhere, institutional investors, economists and others are wringing their hands. They're warning that the vats of stimulus money and credit that governments are pouring into economies world-wide will, at some point, result in rising prices for goods and services."
The contrarian play is deflation. Here is a chart of capacity utilization in the U.S. How do you expect to have pricing power when there is a glut of capacity. When these industries have been scrapped and shipped to China, and we are on stimulus VII, then I can see inflation.
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Update:
ISM index shows big fall in prices paid
http://www.zerohedge.com/article/non-manufacturing-ism-comes-509-price-paid-index-tumbles-14
The Wal-Marting of America continues. Sigh.
I lived most of my life out west where I never saw a Wal-Mart until, oh, well into the 1990s. There was only one nearby, and not that far away, although I lived in a huge metropolitan area, but I never went in. I assumed it was more or less like K-Mart, so not that interesting.
But I made a few road trips across the country, and of course in other parts of the country you do commonly find Wal-Marts. When you're traveling and eating out of your cooler, and the food is running low, if you're driving along and see a Wal-Mart up ahead, of course now and then you pull over. Man, those big Wal-Marts are something else. They have everything, and I mean everything. The prices on some things were surprisingly low. It's mostly cheap crap from China, of course. But I can see why people buy it. Anyway, for me it was buy some food and get the hell out of there, as the whole scene was very unattractive to me, I must admit many of the people in there included. After a while I tried to avoid Wal-Mart, but sometimes it was difficult.
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