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…what industries are being killed by “insane inflation”? ironically long duration tech stocks and crypto have been surging all year and outperforming basically

by tempsy 4y ago

…what industries are being killed by “insane inflation”? ironically long duration tech stocks and crypto have been surging all year and outperforming basically every other sector

worrycue 4y ago
I heard shipping containers have been piling up at China’s ports and China exports are way down - with quite a few factory suspending operations. Supposedly the US stopped buying because inflation means people focus on the necessities like food.
- cwilkes 4y ago
  If people stopped buying then inflation would go down dramatically.
  - lotsofpulp 4y ago
    Prices may stay the same if supply goes down in concert with demand.
- rabbit_1 4y ago
  Likely because multinational firms have been steadily shifting their supply chain and manufacturing out of China
- marcosdumay 4y ago
  Container movement has been erratic since 2020. I would look deeper before inferring causes for piles of them. (Once you actually get evidence of piles of them, because it seems you don't have that yet.) There are many people that track actual goods. It's better than looking for a proxy.
- ChuckMcM 4y ago
  The thought experiment then is to ask "What mechanisms connect Chinese exports with inflation?" To get a better understanding of that, one might "rewind" time to look back at what those containers were carrying when there was a container shortage. Since containers are a mechanism for moving goods, one might look at supply and demand of goods to try to understand what that relationship is. Historically, when supplies are tight, retailers order the same order from multiple suppliers in the hope that one of them will come through. This typically results in adding production capacity to meet this "shadow" demand (there are orders for 300 widgets but the retailer on the other end really only wants 100 widgets, they have just ordered 100 from three different distributors who each passed on that order to the factory). When the factories ramp up to cover that shadow demand, they put a lot of product into the distribution channel but retailer cancels their other two orders after one is filled. As a result there is now 2x the "demand" level sitting in distribution. The next time the retailer orders, their orders are satisfied out of existing stock. Until the distributors have worked through this "excess" they don't order anything from the factories and the factories have nothing to do and don't need to ship anything so the containers sit there empty. This "boom" and "bust" cycle is an oscillation that occurs in systems that are not critically damped (a term from systems analysis). During the 2020/2021 years a lot of demand was unmet and we had the "supply chain crisis." Once things ramped up, it is expected to have an "over supply" crisis.

by tempsy 4y ago

…what industries are being killed by “insane inflation”? ironically long duration tech stocks and crypto have been surging all year and outperforming basically every other sector

worrycue 4y ago

I heard shipping containers have been piling up at China’s ports and China exports are way down - with quite a few factory suspending operations. Supposedly the US stopped buying because inflation means people focus on the necessities like food.

cwilkes 4y ago
If people stopped buying then inflation would go down dramatically.
- lotsofpulp 4y ago
  Prices may stay the same if supply goes down in concert with demand.
rabbit_1 4y ago
Likely because multinational firms have been steadily shifting their supply chain and manufacturing out of China
marcosdumay 4y ago
Container movement has been erratic since 2020. I would look deeper before inferring causes for piles of them. (Once you actually get evidence of piles of them, because it seems you don't have that yet.) There are many people that track actual goods. It's better than looking for a proxy.
ChuckMcM 4y ago
The thought experiment then is to ask "What mechanisms connect Chinese exports with inflation?" To get a better understanding of that, one might "rewind" time to look back at what those containers were carrying when there was a container shortage. Since containers are a mechanism for moving goods, one might look at supply and demand of goods to try to understand what that relationship is. Historically, when supplies are tight, retailers order the same order from multiple suppliers in the hope that one of them will come through. This typically results in adding production capacity to meet this "shadow" demand (there are orders for 300 widgets but the retailer on the other end really only wants 100 widgets, they have just ordered 100 from three different distributors who each passed on that order to the factory). When the factories ramp up to cover that shadow demand, they put a lot of product into the distribution channel but retailer cancels their other two orders after one is filled. As a result there is now 2x the "demand" level sitting in distribution. The next time the retailer orders, their orders are satisfied out of existing stock. Until the distributors have worked through this "excess" they don't order anything from the factories and the factories have nothing to do and don't need to ship anything so the containers sit there empty. This "boom" and "bust" cycle is an oscillation that occurs in systems that are not critically damped (a term from systems analysis). During the 2020/2021 years a lot of demand was unmet and we had the "supply chain crisis." Once things ramped up, it is expected to have an "over supply" crisis.