Truckers

https://www.cnbc.com/2018/05/22/inflation-is-coming-to-the-u-s-economy-on-an-18-wheel-flatbed.html

Investors and policymakers have gone looking for inflation over the past decade and largely have come up empty.

It could, however, come barreling at them soon like an 18-wheeler.

Multiple signs of inflation in freight-related industries are at or near historical highs, in what could be an early sign that price pressures are building and ready to reverberate around the economy.

Freight marketplace DAT keeps track of supply and demand in the freight industry through a bulletin board that matches companies with loads to be delivered to the vehicles that will take the goods to the marketplace. The measures are in the spot market, where vendors that don’t contract their deliveries find drivers for their products.

Recent readings show demand for vehicles skyrocketing, a sign that generally points to inflationary pressures building up in the supply chain.

“It’s an indication that there’s capacity pressure in the marketplace, that brokers are searching more and posting more in order to find a truck,” said Peggy Dorf, market analyst at DAT. “This is an indicator that pressure is much higher than it was a year ago.”

Metrics the firm uses to track demand for trucks are showing a sharp increase and outstripping the number of drivers available. Supply-demand dynamics, then, would indicate rising rates for trucks that could lead to pricing pressures on a broader level.

Loads on the spot market in general are up 100 percent from the same period a year ago. Another measure, flatbed load-to-truck, which tracks the amount of vendors looking for flatbeds and is generally the highest of all truck types, is up 142 percent.

Every other broad market trend line that DAT posts was up double digits on a year-over-year basis — including the all-important fuel costs, which are up 20 percent.

“Trucking in general is a leading indicator,” Dorf said. “If the economy is also growing, it’s one of those rising tides [that] lifts all boats. The pressure on the spot market doesn’t seem to have let up.”

The numbers by themselves, though, don’t indicate that inflation is ready to strike soon. Indeed, the most recent readings, such as the consumer and producer price indexes, show inflation pressures rising though relatively benign.

But they do jibe with some other indicators showing inflation is rising beneath the surface.

Also, the New York Fed’s Underlying Inflation Gauge, which goes beyond more popular data sets like the consumer price index, rose to 3.2 percent in April, its highest reading since July 2006. The Atlanta Fed’s Sticky-Price CPI gauge, a measure of goods whose prices are less prone to fluctuation, was up 2.5 percent in April, its highest level since February 2017.

More than 50,000 truck drivers needed now More than 50,000 truck drivers needed now
5:28 PM ET Wed, 16 May 2018 | 04:31
Now, the rapid increase in trucking demand is beginning to gather attention, with some corners of the financial markets wondering how long it will take until broader inflation gauges are impacted.

“When you have price pressure that is above and beyond what’s normal, someone has to eat it,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “The truckers are obviously going to charge more for their services because they can, the buyers of that stuff who need the trucks are not going to eat the cost. They’re going to do their best to pass it down.”

While the most recent reading of the producer price index showed just a 2.6 percent gain over the past 12 months, the freight subindexes told a different story: truck transportation jumped 6 percent, rail was up 5.1 percent and air rose 3.9 percent. Overall, the general freight trucking component is just below the all-time high it hit in February.

General freight trucking component of the producer price index, from 2008-present.

Source: FactSet

“Demand is still exceeding capacity in most modes by a significant amount. In turn, pricing power has erupted in those modes to levels that spark overall inflationary concerns in the broader economy,” Donald Broughton wrote in the most recent Case Freight Index Report, a widely read industry publication.

While Broughton said he believes technological improvements will offset long-term price pressures, he added that transportation indicators are showing noteworthy levels.

“April’s 12.8% increase [in the Case Freight Expenditures Index] clearly signals that capacity is tight, demand is strong, and shippers are willing to pay up for services to get goods picked up and delivered in modes throughout the transportation industry,” he wrote. “We should also remind readers of a fundamental rule of marketplaces: volume leads pricing. Repeatedly we have watched in a host of different markets, that volume goes up before pricing starts to improve and volume goes down before pricing starts to weaken.”

And the pricing indicators are quietly pointing higher.

Spot market rates for flatbeds were at $2.71 a mile for the week ending May 12, just a penny off the record they had set the week before, according to DAT. A number of trucking companies reported big rate jumps in the first quarter. Daseke said its rates were up 10 percent for flatbeds, while Universal Logistics Holdings said revenue per mile excluding fuel surcharges rose 12.7 percent annually, according to a Journal of Commerce report.

The surge in demand has led to driver shortages and sharp pay increases, which ultimately likely will be passed onto consumers.

“We’re paying a lot more than we ever had,” Robert Ragan, chief financial officer with Melton Truck Lines, recently told CNBC. “We’re in a unique operating environment right now in the transportation industry, where demand is at an all-time high and supply of qualified drivers continues to dwindle. We have a hard time filling our trucks, and pay is skyrocketing.”

It all adds up to an environment that could prove tricky ahead.

The Federal Reserve is continuing to raise interest rates, with at least two more quarter-point hikes expected this year. Central bank officials watch a number of indicators, and if more start flashing inflation signals, that could mean a faster pace of rate hikes ahead.

“It’s inevitable that prices will go up,” Boockvar said. The Fed is “on autopilot now, unless things accelerate on inflation.”

What a crock of shit. I was expecting another +300 rally on Trump’s Chinese trade war victory, part 3. Instead, more nothing.

I do have my IQ edging higher and I’d be remiss if I didn’t tell you that I am very tempted to preemptively celebrate this move, boast and brag, make my enemies feel like small infant children. But I won’t — because I gentleman never has to brag. Winship is implicit.

Utes are the standout sector today and I am long XLU. Heck, you can see my positions and my Quant portfolio for the thru the week Free trials at Exodus, bitches. Just email me: flybroker at gmail.

Also, foreign banks are taking a breather from getting smacked around. Shares of DB, ING, SAN and BBD are sharply higher. Conversely, some bubble basket stocks are getting hit. It’s a mixed bag — a traders tape.

Go eat a large sandwich and then head on over to the gym to do some deadlifts.

I always quiz the landscapers if they’re allergic to the planet like I am and they never are. I suppose they wouldn’t be cutting grass and getting bit by ticks all day if they were. As a young boy, I’d always find myself getting sick around my birthday — May 25th. I recall countless times being in a haze while playing baseball around this time of year, always chalking it up to catching the flu or a cold.

The first year of being a stockbroker, I remember vividly opening 2 new accounts on my birthday and I was sick as a fucking dog. I went home early that day and celebrated over tequila and antibiotics.

Truth of that matter is, I was a fucking moron all of those years, succumbing to stupidity on a grandiose level. I was never sick, per se, but allergic to the planet, or pollen. I actually had to redpill a friend of mine about his seasonal sickness a few years ago and much to his surprise he felt better, almost immediately, following a dose of anti-histamines.

Last year was the only year in well over 15 that I did not suffer from debilitating allergies. Often times I am awoken by them and sneeze for an hour straight, scrambling like a fool on a stool for a Claritin pill to help me live like a normal human being. The reason why I escaped allergies last year is because I skipped gardening. Typically I buy $1,000 worth of plants per annum. I take said plants and toss them into holes I dig in my garden beds. I’d then water them and feel good about them for a few weeks, and then watch them die over the next 8 weeks because I get mad at the water bill, which makes me turn off the irrigation system and then I often forget to water them in time to save them.

I’m a busy guy and don’t have time to water fucking plants.

The secret to feeling better this time of year is to be a hermit, take an anti-histamine pill every single day, regardless of symptoms — and never, ever, fucking garden. I recall a story that was once told to me about Mr. T, during his prime, and how he moved into a very posh Chicago suburb. Like me, Mr. T, aka Clubber Lang, suffers from allergies and he wasn’t having none of that shit in his new suburban mansion. Word is, much to his neighbors dismay, he chopped down all of the trees on his property and had his entire backyard turned into a concrete jungle, in order to avoid sneezing during pollen season.

You can do that, or simply hole yourself up tight for the next month or so and only veer out into the public during rainy days and/or the night — just like a vampire.

NOTE: In honor of Le Fly’s upcoming 42nd bday, we’re doing free trials for Exodus this week. Email me at Flybroker at gmail dot com for access.

NOTE: In honor of Le Fly’s upcoming 42nd bday, we’re doing free trials for Exodus this week. Email me at Flybroker at gmail dot com for access.

About 6 years ago, Bill Ackman and Ron Johnson, former guru from Apple, ventured on the quest to turn JC Penney into a chic retailer, one without coupons filled with elderly people in search of deals. That plan ended in disaster, placing the once legendary retailer in the grips of a debilitating financial crisis.

Look at the revenue and earnings collapse during the Ackman-Johnson era at JCP.

This morning the stock is spiraling lower again, heading towards the $1s, on news that its CEO is leaving for Lowes.

The home improvement retailer announced Tuesday it is naming Ellison president and CEO, effective July 2. Ellison will take over for Robert A. Niblock, who previously announced his intention to retire.

Ellison is chairman and CEO of J. C. Penney, which he has attempted to steer through a turnaround.

Prior to J.C. Penney, Ellison worked at Lowe’s rival Home Depot.

Shares of J.C. Penney were down 6 percent, while shares of Lowe’s were up 2 percent in pre-market trading.

The highly leveraged retailer has struggled to find its place in the evolving retail landscape, hamstrung with by its ability to properly buy clothes shopper want and unprofitable stores.

The retailer has taken a number of efforts to help steward a turnaround, including in March the elimination of 230 positions and the departure of executive vice president of Penney’s omnichannel business, Mike Amend,

Question: When SHLD and JCP go away, what will happen to all of that empty space at the mall?

NOTE: In honor of Le Fly’s upcoming 42nd bday, we’re doing free trials for Exodus this week. Email me at Flybroker at gmail dot com for access.

It’s hard to not categorize this as a win for team Trump. Naturally, some might say the tone of these threats isn’t friendly and it might damage relations long term — but who really gives a shit about feelings anyway. The Chinese eat pets, dogs and cats — believe me — they don’t give a shit about a little hardball negotiation. If I had to guess, they were probably bored of beating us stupid and silly and have enjoyed this new version of American virility.

On news of these tariff cuts, futures are +55, Nasdaq +25.

China’s Finance Ministry said that it will cut import tariffs on some vehicles to 15 percent, down from as much as 25 percent.

The announcement Tuesday also said that tariffs on some automotive parts would fall to 6 percent. The cuts will be effective from July 1.

The move signifies an attempt to open up the world’s largest auto market to international players. Discussion of a potential automotive sector tariff cut surfaced in April, and was mentioned in a speech by Chinese President Xi Jinping that month. It was also revealed that China would permit full foreign ownership of car makers in five years.

According to the Finance Ministry on Tuesday, the average tax on qualifying vehicles will now be 13.8 percent. Car parts to have import duties lowered include bumpers, doors and seat belts.

And, it looks like Trump backed down from penalizing ZTE. This is bullish for ACIA.

Everything is the fuck higher, gold, oil, silver — everything but Bitcoins.

I posted a chart of CRM’s revenue ramp yesterday and all of the faggots got defensive over it, implying I was calling them a scam. I know it’s not a scam — but a growth hack.

All of the gains in productivity utilizing tech can be found inside this one sector: SAAS (software as a service).

In a way, NFLX falls into this group too, as well as Amazon Prime. The favorite business model on Wall Street is a subscription based one. Over the past 10 years, this model has exploded everywhere, as techFAGS use their wits to figure out human behavior, what colors to use in banner ads, words that make people buy shit, etc.

The theory behind SAAS is simple. Find a repeatable business model by subscription, with a low churn rate, that can grow thru a sales force or ad campaigns. The more money you throw at it, the faster they grow. Even during the criss of 2008, these companies grew.

Also, they never show profits — because all of their money is reinvested into growth. It seems like the biggest fucking scam ever — but it’s simply a matter of growing subscriptions, up selling, cross selling, and making sure customers are happy.

Some of the big winners the past year are in this space: ADBE, CRM, NOW, NEWR, ZEN. I will tell you now, the main high growth player in this sector now is ZEN. I’d be shocked if they didn’t catch a bid inside a year or so.

When does the party end, if ever?

Valuation isn’t even stretched, based off recent historical compares.

Just so you know, I’ll be 42 on the 25th of May — giving me just 5.5 years left on this site. When I started blogging in my 20s, I always said the age limit was 47.5; anything older than that deserves to be euthanized. If you’re not secluded in some mountainous village away from the world by the age of 50, you’re living life wrong. No one wants to see old people anymore — that shit is played out. I get it from my kids all the time. I’m an ancient man, a relic from another era and their way is better. Playing video games all day on a 5 inch screen is far superior to hitting fast balls over a park fence and into a bay across the street, tipping one’s hat as he trots across the bases and his enemies on the opposing team lament in their humiliating misery. I am sure placing a ring onto the nose of a shark in some shit-fun game is better.

Having said that, I still have a few years left here until I retire to the green fields of Romania.

Starting now thru this weekend — I’m handing out fresh Exodus free trials. Come check out the upgrades we’ve made to the software, the piped in data, Sharpe ratio tools, and of course my Quant strategies.

Because I now operate with a skeleton crew, you’re gonna have to email me and say hello in order to gain access. Don’t worry, I won’t bite.

[email protected].

Good day gents, ladies.

I actually own this stock from the $30s and have marveled at the market finally adjusting to its valuation and gunning it higher. They’re also opening a Shake Shack in Princeton soon, which is bound to be jam packed every single hour of operation.

The idea of buying SHAK now, after such an extended move, is pretty simple.

You cannot stop the carnivorous American — but can only hope to contain him.

Food is a right, not a luxury.

Shake Shack is the best in class — McDonald’s and Wendy’s eat large dicks.

The restaurant sector has been on fire this year, as American wheel one another in barrows and cash their welfare checks in order to stuff extreme delicacies into their jowls.

While some might point to a new rich, one that is health nutty and who eschews meat for its evil properties, those same people forget that those new rich and aspirational folk are soon to be extinct mammals. Americans are being created every day, some by procreation, others by border crossings. Once assimilated in this vast land of milk and honey, they want to consume.

In 50 years hence, all yoga instructors will be dead, vegans annihilated, and all that will be left is burger eating goblins.

Long SHAK.

Well, well, well what do we have here? After about a decade of sleeping on the job, an economist at Goldman has awoken from his slumber to report that the US is flat broke, getting broker, and there’s nothing that can be done about it.

According to forecasts from bank’s chief economist, the federal deficit will increase from $825 billion (or 4.1 percent of gross domestic product) to $1,250 (5.5 percent of GDP) by 2021. And by 2028, the bank expects the number to balloon to $2.05 trillion (7 percent of GDP).

“An expanding deficit and debt level is likely to put upward pressure on interest rates, expanding the deficit further,” Jan Hatzius – Goldman’s top economist – wrote Sunday. “While we do not believe that the U.S. faces a risk to its ability to borrow or repay, the rising debt level could nevertheless have three consequences long before debt sustainability becomes a major obstacle.”

Economic growth should jump above 3 percent in 2018 thanks to the stimuli, the CBO said, but the acceleration will likely prove brief and debt held by the public soaring to $28.7 trillion by the end of fiscal 2028.

That could create a precarious situation for Congress if the economy faces an economic downturn in the near term, Hatzius wrote, hampering legislators’ ability provide additional fiscal stimulus in times of economic downturn.

“Lawmakers might hesitate to approve fiscal stimulus in the next downturn in light of the already substantial budget deficit,” the economist said. “While we would expect some additional loosening of fiscal policy during the next downturn, there is a good chance in our view that it would be less aggressive than it was in the last few recessions.”

“The current fiscal expansion … must at some point give way not just to a neutral stance, which we expect by 2020, but to a tightening of fiscal policy that could restrict growth,” Hatzius wrote.

The great lie that Goldman and other banks like it are pushing now is that high deficits is forcing rates higher. In a natural world, this might be true. But in our world where the dollar is currency reserve and the banks make up the rules as they go along, this is entirely artificial. There isn’t any tangible inflation, as evidenced by the CPI. So why in the fuck is the Fed raising rates? The only outcome this is guaranteeing, given the fiscal deficit and Congressional inability to manage a budget, is a collapse.

If we cannot extricate ourselves from a fiscal deficit during the good times, what in the fuck will happen during contraction?

Short term, enjoy the rallies and the perversion of GAAP accounting, because long term our fate is secured and we’re all fucked.

I’m so glad no one can ban me from my own site, at least not yet.

Let me paint a picture for you.

You’re cutting your grass with one of those faggot non-machine grass cutters when an old man with a shot gun presses upon you with this question, gun to face.

‘Son, you don’t know who the hell am I — but you’re gonna give me your damned best stock idea right now or help me god I will put a hole in your face the size of Nebraska. Now go on and put that damned grass cutter down and give me your best idea — and make it a good one.’

This is mine.

Try and beat me.

Pro tip: you can’t.