We have recently seen record high prices in coffee, cocoa and cattle as the price of oil also spikes and the travel boom continues. Take a look…
Massive Spike In Oil Prices
January 14 (King World News) – Peter Boockvar: Many of the world’s refiners, particularly those in China and India, that were previous to last week able to buy Russian oil are now scrambling to buy it from elsewhere after the newly implemented sanctions on the Russian energy space, particularly the ships that transport its oil. In response, the price of oil continues higher by almost $2 for both brent and WTI to a level last seen in July last year.
Helped by this rise in oil prices, along with natural gas, keep your eye on inflation expectations in the TIPS market as the 2 yr inflation breakeven as of Friday’s close last fell on December 30th and is up 21 bps on this run to 2.74%.
The move up in the 5 yr is higher in 8 out of the last 9 days and by 16 bps to 2.53%.
Bond Market Police In Control
I argued a few times last year that central banks that were cutting rates, including the Fed and others, were all trying to catch the falling inflation knife. While inflation has decelerated notably, rather than wait until inflation was sustainably under control, many shifted their focus to their concerns with economic growth trends instead. Now of course they have a problem with the continued rise in long-term rates. This said, I do continue to believe that excessive debts and deficits are a key factor too in that the global bond police now are driving around the bad country neighborhoods with the stretched sovereign balance sheets.
To highlight today, it is Italy’s bonds which are selling off the most with its 10 yr yield up 7 bps to 3.84%, the highest level since July 2024.
Record High Prices In Coffee, Cocoa And Cattle
Over the last month we’ve seen record high prices in coffee and cocoa along with cattle too, helping to raise the price of beef. As I mentioned here just a few weeks ago, I’ve had my eye also on the main row crops of corn, soybeans and wheat to play catch up on the food upside. Today, corn is up 1% to the highest level since December 2023 and we continue to be long and bullish the fertilizer stocks that have been brow beaten. While corn is still well off its 2023 highs, as seen below, there is plenty of running room available.
Travel Boom Continues
Delta showed us last week that travel is still a bright spot in the US economy, and globally too. In Q4, they had “the largest December quarter profit in Delta’s history (at $1.6 billion), improving more than $500 million over last year.”
“The US consumer is financially healthy and continues to prioritize spending on experiences.” I’ll add, at least their customers are. “Closing out 2024, we saw an acceleration in air travel demand from corporates and consumers and co-brand card spending growth accelerated. This momentum is continuing into the March quarter, where we expect to grow the top line by 7% to 9%.”
“Corporate sales grew 10% y/o/y, improving three points sequentially. Strength built through the quarter driven by both volume and fare with broad based strength geographically and across all sectors…Premium revenue performance outpaced main cabin throughout the year, up 8% over prior year with positive unit revenues in all four quarters of ’24.”
Of note on the pricing side, “Domestic demand remains robust with considerable improvement in the supply backdrop over the last few months as unprofitable supply is removed across the industry.”
Finally, “We have good visibility into the spring and summer and expect another year of record profitability in our largest international entity.”
Prins Warns Gold Price May Double To $5,400
To listen to Nomi Prins discuss why the price of gold may double to $5,400+, what to expect from for the silver market, mining stocks, uranium market, currency markets, CLICK HERE OR ON THE IMAGE BELOW.
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