"The U.S. sold yesterday 30-year bonds at 5.216%, the highest yield since 2007. The Treasury auctioned $31.3 billion in 30-year bonds. The high yield cleared at 5.216%, up sharply from 5.058% at the prior auction. The bid-to-cover ratio came in at 2.39, indicating decent but not overwhelming demand. The U.S. government is now paying over 5.2% to borrow for three decades, a level not seen since before the Global Financial Crisis."
Eventually, the super nova of reality collides with the death star of fake news and "gray area" reporting meant to postpone the inevitable. For weeks now I have been reporting on actual facts that haven't made themselves apparent yet in daily life but will eventually impose themselves with extreme prejudice such as the inflation tsunami headed straight for us. As the cost of borrowing capital continues to climb and the pass-through cost increases from higher Diesel prices feed into absolutely everything, small business owners will have no choice but to increase prices.
Diesel is just getting started folks, we haven't seen anything yet in these early innings. Shortages have already become critical and media clowns keep whistling past the graveyard. It's not just fuel; there are critical feed-stock elements that have all been severely restricted like Aluminum, Copper (which just hit a new record high), Urea (critical for fertilizer), Sulphur (which is needed in mining and fertilizer production) and Helium (which is used to make computer chips). Imagine how well the AI stocks will perform when investors figure out that there are only a few weeks of chip stocks left and no way to replace the Helium need to make new ones. 44% of all helium came from the Persian Gulf. You know, the one that the US used to control?
We could try to bomb it open again if we only had enough weapons. We could make more weapons if China didn't control all the elements we need to do that. The picture I'm seeing is bleak; there is no way to return to February 27 levels of Persian Gulf supply lines and the world is quickly using up reserves with no way to replenish them. When the cupboards are empty it's game over. No ships are on the horizon carrying fresh supplies. And if that weren't enough to worry anyone, we are now refinancing our nearly $40 Trillion in debt at over 5% interest. What could possibly go wrong?
In my daily conversations with business owners I hear one thing over and over: "Inflation is killing me". According to the NFIB, inflation is listed as the number one problem for small business owners which is understandable considering how many critical aspects of running a business inflation affects. Supplies, transportation, customer demand and energy costs are all exploding higher putting asphyxiating pressure on margins and by extension the viability of most businesses. Here in West Central Florida Diesel fuel is over $5.50 a gallon with some states printing prices much higher than that. This is unsustainable at current grocery pricing levels. Simple as. The more folks have to pay for groceries they less money they have to buy your products.
The problem is that nothing is being done to address the issues. On the contrary, the policies in play right now are very likely to make things worse. Interest rates are the next shoe to drop IMHO as well as Oil prices which are being heavily manipulated to keep them artificially lower. The new networks continually give the the price of Brent Crude and WTI (West Texas Intermediate Crude) which nobody actually uses! Refiners need Sour Crude to make Diesel and Kerosine (Jet Fuel) otherwise they shut down. The "crack spread" on Diesel right now is higher than the actual price per barrel of Oil showing a huge problem in getting supplies of the "right" kind of crude they need. No one uses Oil except refiners. We use the by-products like Diesel which are now in critical short supply.
Here are some interesting articles I saw last week:
"Reuters reported that only SIX vessels passed through the Strait of Hormuz on Monday. That compares with an average of about 11 during the previous 10 days, which is already disastrous when you understand what normal traffic looked like. Before this war, roughly 130 to 140 ships crossed the Strait every day."
"the Fed will eventually panic in cooperation with the US Treasury and engage in further acts of yield curve control, dollar dilution, and increased global economic instability which will only add to the cumulative inflation problems and affordability issues for consumers in the US."
"Although Bessent‘s oil pipeline proposal sounded like a nifty way to neuter Iran, he fails to grasp the true economic importance of the Persian Gulf and the leverage that Iran will continue to have for years to come."
"The debate isn’t about burritos. Those are symbolic. The point is that U.S. “leaders” have wrecked the currency to pay for foreign wars and domestic boondoggles at the expense of Americans who resent being ripped off. Many are young people who were pilfered before they were born, and inherited the mess bequeathed by the people berating them"
"Researchers at Govini, a firm that maps the Pentagon’s supply chains, found that more than 80,000 parts across roughly 1,900 weapon systems incorporate just five processed minerals — and that the global supply of all five is dominated by China."
