Inflation Skyrockets as Trucks Slow Down?

Clifford Bennett, Chief Economist at ACY Securities

13.12.2021 02:00 pm

#stocks

Inflation in the USA is at 6.8%. Gosh, that is a disaster that is already here.

It is the case that we warned inflation was not transitory and would become a major problem, in June. When absolutely every investment bank and economists was sure it was transitory. Part of the justification was because the Fed said so. That is the only reason the RBA said it too. Why do we pay for a research department at the RBA?

Now, many of those investment banks are saying exactly what we said all along, but they still do not understand the process as we have outlined here numerous times.

Not only did we tell you inflation was here to stay and would get much worse, but we have maintained an explanation, made well in advance of these figures as to what was exactly happening. Put simply, price gouging as a function of the re-established freedom of pricing not seen since before globalisation.

US Consumer Sentiment continues to languish at truly uninspiring levels. Low confidence/high inflation does not a pretty picture make.

Add what?

All around the world diesel trucks everywhere are keeping pollution down with a process that requires the addition of a product called AdBlue. There is a lot of noise around this at the moment, and while it may be challenging to sort the facts from the conjuring, it is clear there is a significant problem ahead.

Reports that China has banned the export of this product essential for diesel trucks to operate highlights the depth of the situation.

If it is not available, some say Australia could run out as soon as mid-January. Other countries are scrambling to find supplies.

As the trucks will default to "crawl" speeds of 5km to 20km per hour, then either a workaround has to be devised, or diesel pollution allowed to erupt globally overnight. In case you are unaware, diesel fumes are highly carcinogenic and this is why cities like London have banned diesel vehicles. If you were sold the green value of diesel, think again.

While it is highly unlikely our trucks will stop operating, there is risk of a workaround slow-down as trucks are taken off the roads temporarily. Assuming AdBlue actually runs out or begins to be rationed.

Despite being a low level of probability, should it eventuate, a further global slow-down in ground transport is something that could severely impact stock market sentiment.

Could a reverse pandemic of AdBlue be upon us?

US Inflation leaps and bounds.

Annual inflation reached 6.8% in November and is likely to keep going. Remember when all the banks were already surprised and told you 5.4% was definitely the top?