Stagflation: High Unemployment, High Inflation, Low Growth -- November 3, 2022

Battle royale between Biden/Dem-controlled Congress and Jay Powell.

As fast as Jay Powell tries to control inflation, Biden/Congree keep spending more money.

Most of the inflation is being driven by high-energy prices, and most high-energy prices are traced back to Biden's botched decisions.

I don't agree with a lot of what is said in the video above but note the number of followers.

This speaks volumes about high energy prices.

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Recession

I'm not convinced the US is inevitably headed toward recession. Jay Powell's team is too smart to let that happen. 

Too many twitter contributors are confusing "stock market bear market" with recession.

These job reports this past year have been incredible, and yet companies still can't find enough workers.

Jay Powell's team is seeing things that twitter contributors are unable to see -- the formed is looking strategically -- long term -- while twitter contributors are looking tactically -- their net worth on paper and short term. 

We are in a vicious cycle right not: high gasoline / diesel prices --> more inflation --> higher gasoline / high diesel prices --> more inflation. 

Jay Powell's problem is his one tool -- raising the Fed rate -- does not target the problem; it hammers the entire economy. 

The president and Congress had/have the tools that could/can target the underlying problem but they did not use those tools and, worse, made critical mistakes the day Biden became president. Their bad, bad decisions made a tough problem tougher and the administration seems befuddled. 

I get the feeling that Jay Powell is very, very angry (we've discussed this before) and he will keep raising rates until Biden / Congress get the message.

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Price of Gasoline

Most fascinating: watching the price of gasoline. There is clearly a disconnect right now between the price of oil and the price of gasoline. We're seeing a divergence between the price of a barrel of oil and the the price of gasoline.

Much of this is related to the cost of literally delivering gasoline to the corner service station assuming the corner service station can actually find a source for the gasoline they need. Simply look at the price of gasoline in states where the refineries are located, and the states where there are no refineries. 

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Investing

As noted often on the blog, I add to my investments during the first and third weeks of each month.

Today, was the day for investing. 

It was incredibly difficult not to put the entire cash position I had into Devon after the 13% drop in share price yesterday.

But I kept to my plan:

• Buffett-like, Blue Chip: 40%
• Beat down infrastructure (mostly semis, copper): 30%
• Energy (oil): 20%
• mRNA: 10%