For The Archives -- Inflation. Again. August 10, 2023

Locator: 45410INF.

In a sidebar e-mail discussion, I replied to a reader with this not-ready-for-prime-time comment regarding US inflation.

For the archives. This will become part of a longer post on inflation.

Inflation for me is a data point, an interesting number, but not more than that. About as interesting as knowing what today's temperature will be. 

I don't know anything about bonds, and I don't make any (conscious) investment decisions based on inflation numbers.

I find it interesting that most folks who don't trust government numbers at all, trust government inflation numbers completely.

For me, I used to trust government numbers implicitly, never gave them another thought. But after the EIA numbers two weeks ago, I don't even trust the EIA reports any more. 

I guess like Reagan, "trust, but verify."

Two weeks ago, the EIA reported the largest drop ever in US crude oil supplies (which was impossible for that much oil to disappear) and the movers and shakers knew that, and the price of oil actually dropped. [With that much oil disappearing, WTI should have surged; it didn't. Folk knew it was impossible for that much to disappear. Gasoline demand had been plummeting for four weeks, many refiners were shut down for maintenance or high summer heat, and export/import numbers had not changed.]

This past week, another large crude oil number but this time, the supply increased by a significant amount. The price of oil should drop; it didn't, it increased. Again, the movers and shakers know something's afoot and appear to be ignoring the EIA reports.

It also appears that the EIA and API (American Petroleum Institute) are using the same data points and yet can (but not always) come up with wildly different numbers. Investment analysts rely on EIA numbers but not API numbers, from what I see.

So, for me inflation numbers are simply a data point -- a data point that has become nothing more than political commentary. 

I know I'm in good company because Warren Buffett has implied just as much: he makes deals, looks for deals regardless of what the economy is doing. Regardless of inflation he parks his money where he gets his best return while waiting for best opportunity to pounce. I don't understand any of that, so I just invest as much money as I have available every two weeks. 

I won't time the market, certainly not on inflation numbers and certainly not based on government figures.  

Note: UPS drivers, $170,000.

Note: UAW workers looking for a 49% wage hike over the duration of the new four-year contract.