CRB Commodities Index Daily Chart; Goods Inflation Moving Higher

Inflation is a hot topic these days. King Donnie proclaims that he will slay the Bidenflation dragon and deliver lower prices to the huddled masses. Americans want action not words so chop, chop, orange head. The Fed and others are concerned about inflation heating-up in the near-term. If inflation begins running higher, the Fed will not want to cut rates anymore but that will create further selling in stocks since the easy money punch bowl will be taken away.

Inflation is made up of the goods and services components. For decades, the two track each other well and where one went the other followed and visa versa, like your shadow. The COVID-19 pandemic turned this relationship asunder. Since everyone was isolating from one another, except for the Amazon driver that enters Miss Summer's house and does not reappear for 20 minutes, so services inflation fell off a cliff. There were no services. No travel, no concerts, no nothing.

Then, as the covid pandemic subsided, people were champing at the bit to travel again and do fun things so services inflation shot to the moon. Goods inflation also ran higher as people tried to return to normal in 2022. Inflation peaked in May/June 2022. The CRB is starting to climb to levels that are comparable to inflation running up into the May/June 2022 peak; not good.

Over the last couple months, services inflation data hints that it may be subsiding and coming back into normalcy. After all, how many times can you fly to Europe or Japan on vacation? Or visit Disneyland? Or see the Rolling Stones in concert, er Rolling Fossils? Or go whitewater rafting in West Virginia? But as services inflation started to subside and move lower to join the more tame goods inflation, bingo, old guys say bingo a lot, the goods inflation now runs higher like a banshee.

The black circle is the death cross and the gold circle now shows a golden cross in play with CRB going to the moon. Commodities are inflating and flying higher. Up, Up and Away. Honey, take a ride on my big beautiful balloon. CRB runs higher from 265 to 306, a big 41-point gain, or +15.5%, in only 4 months. CRB is rising at +4% per month for the last 4 months; or +1% per week for the last 4 months. No wonder food and other prices are not going down. Keystone asked the clerks at the local grocery store if they sell meat on an installment plan. Nancy, the battleaxe that is in charge of the deli counter, pushed her hair net to one side, and told him to go eat spam.

The rise in the CRB, GTX, DBA and other commodity tickers over the last month or so is stealth. As overweight Americans gorged themselves with one more turkey leg, another helping of ham, and slice of pecan pie with Cool Whip topping, they forgot to watch the commodity charts to see that goods inflation is rocketing higher. The move fits in with the economic growth narrative but it could be a false start. Wages, a key component of inflation, are stagnant as the Friday Jobs Report shows, so they will not be adding to further inflation.

America's wealthy, that were made filthy rich by the Fed's 15 years of money printing, have been supporting the economy continuing to spend without worry or fear. This cannot go on forever, and yet it continues. The EOY is an odd time because companies will not can workers during the holidays for fear of looking like Ebenezer Scrooge, so the mass layoffs occur in January. Over the next couple weeks, lots of Americans are going to be called into the boss's office and told their services are no longer required; now hand in your door key and get the hell out.

Keep an eye on commodities. If CRB continues higher verifying an ongoing trend of higher goods inflation, the services inflation will remain status quo (stop coming down), or also head higher, which means headaches for the Fed because rate hikes may be required going forward. Maybe commodities and goods inflation is floating higher because King Donnie is going to deport a lot of the workers in these industries that supply commodities? Prices will rise if workers become scarce. You can pick your own steenkin' fruit and rebuild your own house (California wild fires and Carolina floods).

If you had to guess, this recent move higher in goods inflation is probably a fake-out, and the path forward is not economic growth but rather recession; the missing recession. The Godot Recession remains in play and, unlike the play, it will probably show up this year, so the CRB and goods inflation may be a short-lived event fueled by rich people spending lots of money in Q4. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.