As the world edges closer to the next crisis, nothing to see here…

Nothing To See Here
June 1 (King World News) – Here is what Peter Boockvar had to say as the world awaits the next round of monetary madness:  Now that we actually have the 65th Italian government since WWII, Italian bonds and banks are rallying. The 2 yr yield is down 27 bps and below 1% at .80%. The 10 yr is lower by 23 bps to 2.56%. What a wild ride but take note that these yields are still well above where they were just two weeks ago. The MIB index is higher by 2.6% with Intesa and UniCredit up about 6% and the smaller banks up 7.5-10%. I’m not worried at all about Italy leaving the euro as most citizens don’t want to. Italy’s challenge remains the lack of stronger growth, a huge sovereign debt pile, and the end of ECB QE (see chart below).

Nothing To See Here As Massive Spike In Italian Yields Reverses!

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Boockvar continues:  Lastly, reflecting the capacity issues, Supplier Deliveries (the higher it goes, the more difficult it is to deliver product in time) rose .9 pts to 62, the 2nd highest print since 2010.  Along with this, prices paid rose a touch to 79.5, the highest since April 2011.

Of the 18 industries surveyed, 16 saw growth vs 17 last month.

ISM said “Demand remains robust, but the nation’s employment resources and supply chains continue to strong. Respondents say price pressures at their companies is causing price increase discussions as we prepare to enter H2.” Underline is mine.

The increases in prices across all industry sectors continues. The Business Survey Committee noted price increases in metals (all steels, steel components, aluminum and copper), corrugate, freight, electronic components, wood and some chemicals. Shortages continue in electronics components, with steels, steel-based products, electrical components, aluminum and freight added to the list this month.”

Read these quotes directly from companies:

Very difficult to hire skilled and unskilled labor.” (Food, Beverage & Tobacco Products).”

Sales remain strong. Lead times and direct material costs are soaring.” (Machinery).”

“Suppliers are seeing price increases and trying to pass them on.” (Miscellaneous Manufacturing).”

“Continued talk around steel tariffs has resulted in price increases for domestic line pipe, while HRC seems to be moving sideways. Temporary exemptions for allies and an agreement with South Korea have not calmed the market.” (Petroleum & Coal Products).”

“Industry demand is causing price increases. Fuel prices are also on the rise, and there have been (price) increases associated with that.” (Primary Metals).”

Severe allocation, long lead times and upward price pressure, particularly in the electronic components market, continue to hamper our ability to meet customer demand and our shipping schedule.” (Computer & Electronic Products).”

King World News note:  The continued upward pressure in global inflation is going to be extremely bullish for gold and silver in the medium- to long-term.  It will also be wildly bullish for the high-quality companies that mine the metals, even though virtually no one seems to agree with that today.  The next leg higher in the metals and mining shares will be breathtaking.

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