Monday, January 30, 2017

Germany "inflation!"

Short term pick-up...


Footsoldier said...


Have you seen this graph ?

Matt Franko said...

No that is a good one though...

Footsoldier said...

If you go into the comments part it even tells you in detail what each country's import prices were made up of.

Gets released every month. Next one 10th feb.

Am I right in thinking. Let's say Trump puts a 10% tax on all imports from the EU. Then what he has done has just increased EU export prices to the US by 10%.

Thus the EUR/USD would rise ?

Would the zombies recognise this or are we going to make a killing ?

Then of course the EU are not going to take that lying down and then they will put a 10% tax on all imports from the US. Thus we are back to where we started.

Is this correct ?

Footsoldier said...

The EUR/GBP is a mystery currency pair.

Everywhere you look EU exporters to the UK are putting their prices up. The UK exporters to the EU are doing nothing.

So you would think that this currency pair would be flying upwards. Plus this infact would put more pressure on the EU exporters to keep raising their prices in a never ending cycle that feeds on itself.

Right up to the point when UK consumers can no longer afford to buy EU exports. So they would then have to start cutting their prices to keep their market share.

Yet, on closer inspection the EU exporters that are putting up their prices are mainly companies based in the UK. A foreign entity owns a British brand that uses British products to sell to a British market. But they want the profits to stay the same in a foreign currency.

The GBP/USD is operating in a similar fashion. No wonder the £ is at such low levels. Weetabix has just tried the same trick because wheat is sold in $'s.

I can see the £ staying at these low levels until this cycle has played itself out and the exporters can no longer keep on raising prices and evetually they will have no choice to cut them or lose market share. Or until Carney does something that spooks the zombies.

It is crazy the lower £ is punishing exporters to the UK. Yet, the exporters answer to all of this is to keep raising their prices which keeps pushing the £ lower. They are just adding fuel to the flames.

I Still don't understand why the UK exporters don't raise their prices and make hay while the sun shines. They now have plenty of room to do so. They'll never get a better chance to increase their profits.

It is a mystery the way both players are acting. Against their own interests stuck in a time warp of fixed exchange rates.

Matt Franko said...

Yes existing European products in the US and financed would go up in value.. which would increase loan asset values in USD terms...

But you are correct the producers could react by lowering prices and offset the effect of the tariff...