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"I've Never Seen A Market Like This:
Goldman Sees Shortage Of Everything! You Name It We're Out Of It"
by Epic Economist
"In a time when social media is flooded with pictures and videos of empty shelves from all across the nation, Goldman’s head commodity strategist, who’s one of the most respected analysts on Wall Street, is saying that the extensive shortages faced by global commodity markets are simply unprecedented. We have a lot to discuss, so don’t forget to leave a thumbs up, subscribe, and turn on the notifications so you don’t miss future videos.
In a recent interview with Bloomberg TV, Jeffrey Currie revealed that global markets are "incredibly tight from a physical perspective," and warned on shortages of many commodities. “I’ve been doing this 30 years and I’ve never seen markets like this,” Currie said on Monday. “This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.”
At this point, the shortage of virtually everything has translated into record price increases all across the board, according to Bloomberg’s Bloomberg Commodity Spot Index, which tracks the costs of 23 different energy supplies, metals, and crops. This extraordinary surge is being driven by soaring oil prices, which have hit the highest level since 2014, with the benchmark Brent crude oil rising as high as $94 today, assuring even more pain at the pump. All of this chaos on global markets is affecting an overwhelming majority of U.S. businesses, which are already under extreme stress due to the new vírus outbreak, labor shortages, and other supply chain bottlenecks.
In addition to paying more expensive prices for commodities and raw materials, a report released this week by the Goldman Sachs 10,000 Business Voices group found that 97% of U.S.-based businesses are reporting operational difficulties given the “perfect storm” plaguing their production. The survey exposed that 89% of business owners say that labor constraints are impacting their bottom line. Nearly 84% have been struggling with inflation and widespread price increases, with 76% of those respondents noting that higher prices are having negative impacts on their financial health. Meanwhile, shortages of materials and parts have led 37% of U.S. businesses to temporarily close or scale back operations.
Altogether, more than 90% of study participants - which included board members and leaders in the supply chain and procurement departments - report that raw material prices have risen significantly compared to a year ago. At least, 45% of these companies have recently been unable to operate at full capacity due to the lower supply of raw materials. In a note about the latest disruptions, Lecat, a Managing Director at Inverto, said: “In the short term, companies cannot escape rising prices, you can't beat the world market, and this crisis affects everyone – both internationally and the direct competitors. The most important thing businesses can do right now is to secure supplies in order to maintain delivery capacity.”
However, it’s safe to say that not all of them will be able to restock their inventories and afford premium prices. Almost 76% of all respondents expect strong growth in raw material costs throughout the whole year. So far, prices for aluminum rose 48% compared to a year ago, the same as iron, steel, and plastics. Paper rose 40%, copper 36%, chemicals 27%, electricity jumped 27% and oil prices increase 23%.
The consequences of shortages and price hikes for small businesses are threatening their survival. Within six months, hundreds of thousands of U.S. small businesses may be bankrupt. But conditions have gone so out of control that some big names are suffering as well. For instance, due to the scarcity of metals, parts, and semiconductors, major automakers have been severely impacted. According to one estimate by the US-based consulting firm AlixPartners, the global chip shortage will cost the auto industry $210 billion this year.
Last week, Ford announced that the worsening shortage is hitting the company’s production numbers, which is forcing it to halt operations in several plants across the U.S., Canada, and Mexico. Ford joins many other automakers and tech companies facing the same issues, including, Tesla, Apple, and Sony. But the scarcity of chips has hit a wide cross-section of industries, causing backlogs of orders for products that go way beyond vehicles, but also consumer electronics and household appliances.
On the other hand, we have many signs that consumer demand is already cooling off. As inflation roars and people’s purchasing power shrinks, recessionary forces are gaining steam, and the coming hike in interest rates will accelerate this downward trend even further. That’s to say, business owners should start preparing for the worst while consumers should brace for a very turbulent year."
can you think of anything the political class has not done to the u.s., that you would do, if you were trying to destroy a nation
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