Global home prices are rising, but not to the same extent everywhere. Canada and Germany’s home prices made much sharper gains than other G7 countries
Silicon Chip Shortage Leads To Potato Chip Shortage: Farmers Halt Equipment Shipments To Dealers
Readers have been briefed on the ongoing semiconductor shortage that may last a “couple of years.” The auto industry has grabbed the spotlight as the hardest-hit industry, with some of the world’s biggest manufacturers restricting production.
According to a new report, the worldwide chip shortage is impacting the agriculture industry that may last for a couple of years and has already impacted the price of potato chips.
Hoosier Ag Today reports, “The biggest factor impacting the ability of US farmers to produce the food we need has nothing to do with the weather, the markets, trade, regulations, or disease. The worldwide shortage of computer chips will impact all aspects of agriculture for the next two years and beyond… farm equipment manufacturers have halted shipments to dealers because they don’t have the chips to put in the equipment… not only have combine, planter, tillage, and tractor sales been impacted, but even ATV supplies are limited. Parts, even non-electric parts, are also in short supply because the manufacturers of those parts use the chips in the manufacturing process. As farmers integrate technology into all aspects of the farming process, these highly sophisticated semiconductors have become the backbone of almost every farming operation.”
Rabobank’s Global Economics & Markets desk commented on the Hoosier Ag Today report and cautioned on the “technological wonders of a global economy based on just-in-time supplies of a few key inputs from only a few locations; and then demand surged due a virus that ran rampant through said global economy; and supply chains got snarled for that, and other reasons; and now a lack of silicon chips even impacts on the price of potato chips (in the US) and chips (in the UK).”
The shortage has caused Reynolds Farm Equipment, one of Indiana’s largest John Deere dealers, to inform customers that order times are unknown at the moment because production for specific equipment has been disrupted because of the lack of chips.
Bane Welker Equipment, which carries Case farm equipment and several other notable brands with dealerships in Indiana and Ohio, urged customers to plan ahead. The dealership warned customers that combine harvesters, planters, tillages, and tractor supplies have been limited because of the chip shortage. They even said ATV supplies are limited. All of this has severely dented sales for the dealership.
Farmers have been rapidly integrating technology into the farming process for the last decade. Agricultural technology has enabled farmers to produce higher crop yields, decrease water, fertilizer, and pesticides, which keeps food prices down and saves the environment. Though as Rabobank described earlier when chips go missing the technological wonders of a global economy come crashing down.
“In the U.S., we love our quick-fix solutions, which usually involve federal government bailouts. This time, however, that solution will not work to solve the shortage,” said Hoosier Ag Today.
Intel’s CEO Pat Gelsinger has been the latest in a chorus of voices to warn about the ongoing semiconductor shortage that will last for a “couple of years.”
Gelsinger said U.S. dominance in the chip industry had dropped so much that only 12% of the world’s semiconductor manufacturing is made in the U.S., down from 37% about 25 years ago.
“And anybody who looks at supply chain says, ‘That’s a problem.’ This is a big, critical industry and we want more of it on American soil: the jobs that we want in America, the control of our long-term technology future,” he said.
Chip giant Taiwan Semiconductor Manufacturing Co. is also warning that the shortage will continue throughout this year and maybe extended into 2022.
The worsening shortage is not just crushing the auto industry. It’s also spilling over into farming, where some farmers are unable to source new equipment. What this means is used farm equipment prices are about to skyrocket in price.
US Close: Powell’s Mic Check, Taper Confirmed, Oh Snap, Earnings, Flash PMIs
US stocks declined from record highs after Fed Chair Powell signaled they are on track to taper but refrained from giving any signs about interest rate…
US stocks declined from record highs after Fed Chair Powell signaled they are on track to taper but refrained from giving any signs about interest rate hikes. Powell did not deliver a clear message at first, as audio issues made it difficult to hear him say that substantial progress in the labor market recovery was made and that they are ready to taper. The US economy still needs to fill 5 million jobs before the labor market recovery is back to 2020 levels, which should suggest immediate rate hikes after tapering is done might be a bit too aggressive.
The Fed Chair noted that the uneven recovery will eventually see job growth to return to the high levels seen in the summer. Bottleneck and supply chain issues will continue to keep pressuring prices in the short-term, and that them will probably last a lot longer than the Fed wants. Powell is still holding onto the belief that inflation will eventual abate late next year. If inflation does end up being persistent the Fed will use their tools.
The key takeaway from Powell was that the Fed is on track to begin tapering and that should be done by mid-2022, transitory inflation might last a little longer than expected, and that rate hike expectations should be written in pencil.
A busy Friday
Wall Street settled lower as Fed Chair Powell prepared markets for a November taper announcement and that rate hikes will happen if they are wrong about inflation being transitory. Some traders used Powell’s comments to lock in profits, but overall still remain optimistic following today’s mixed earnings, relieft that Evergrande made a crucial payment, and as US service sector activity bounces back.
Supply chain issues were the primary catalyst for poor earnings and cautious outlooks from Intel, Snap, Beyond Meat, and Chipotle US stocks refuse to break. There were some strong results from American Express, Regions Financial, and energy stocks continue to benefit from rising crude prices.
Social media platforms and companies dependent on advertising revenue are declining as supply chain issues have some companies pulling back ad spending. Snap stated that global supply chain issues and labor shortages are impacting their partners and that probably will remain the case throughout the holidays, which could really take away from what should be their strongest quarter.
The flash PMIs in the US provided optimism that the economy is still on sound footing. This month, the service sector rebounded. Despite the slowdown in economic activity that is being seen across the globe, both the US manufacturing and service sectors have activity in the high-50s. IHS Markit noted that the economy accelerates despite bottlenecks as services revive from the Delta wave, but prices rise at record pace. Everything from the flash PMIs matches up with everything we are hearing this earnings season, which should have investors getting more nervous that inflation may end up being persistent.
Commodities and Cryptos: Oil extends gains as rig count dips, Gold volatile, Bitcoin exhaustion
Oil Crude prices only have one way to go after US and European flash Manufacturing PMI data show activity still remains strongly in expansion territory. …
Crude prices only have one way to go after US and European flash Manufacturing PMI data show activity still remains strongly in expansion territory. Last night, President Biden prepared Americans to expect to be paying over $3 a gallon. Biden noted that if the US taps the Strategic Petroleum Reserves, that will only help Americans by 18 cents a gallon.
WTI extended gains after the weekly Baker Hughes crude oil rig count declined by two rigs. US production was ramping up post-hurricane IDA but now seems to have plateaued.
WTI crude has strong resistance from the $84 level, but that might not hold next week. Both supply and demand side drivers remain mostly bullish and unless the north gets warmer weather forecasts, $90 oil seems inevitable.
Gold was having a nice Friday after another round of earnings made some investors boost their inflation hedges, safe-haven demand improved as Europe and Asia are still battling COVID, and as easing fears over China’s property sent the dollar lower.
Fed Chair Powell ended bullion’s strong finish after signaling they are ready to start tapering. The removal of stimulus and the signal that rate hikes will likely be determined if inflation runs wild into the summer was the main driver that sent gold sharply lower. The front end of US rates dropped hard post Powell and that had gold drop over $30 before stabilizing close to the $1800 level. Gold will finish the week higher as it is starting to look attractive again for some investors. Wall Street knows that negative real yields will remain well into next year and that that gold will reassert itself as an inflation hedge.
Bitcoin continues to drift away from record highs as exhaustion signs set in. Bitcoin’s second future ETF disappointed as it provided an unwelcome dip on its first day of trade. Both Valkyrie Bitcoin Strategy ETF and the ProShares Bitcoin ETF are trading below their trading debut levels.
A healthy consolidation should be welcome news for Bitcoin bulls, but a break below $60,000 might unnerve some short-term traders. Bitcoin won’t make a run towards the $70,000 level, until the next wave of Wall Street buys actual Bitcoin and not just this new wave of products.
5 Articles On the Housing Bubble In U.S. and Worldwide
Many articles are published every day on the housing bubble in the U.S., Canada and around the world so here are 5 such articles you might have missed…
Many articles are published every day on the housing bubble in the U.S., Canada and around the world so here are 5 such articles you might have missed that are well worth your time to read.
High flying home prices may be getting close to pushing their limits as last month home sales also saw a sharp decline in volume, partially attributed to prices.
Bloomberg Economics says the run-up in global real estate prices over the last year has produced a warning signal unlike any other, not seen since right before the 2008 financial crisis.
The post 5 Articles On the Housing Bubble In U.S. and Worldwide appeared first on munKNEE.com.
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