1. The pressures on inflation are going to come from food and fuel. The basic facts remain the same despite of threat of global recession is getting more real. It does not matter whether we get it right or wrong. If no recession, we are more prosperous, then we have more money, then demand is going to pick up. Inflation will accelerate. If there is a recession, recession cannot go on forever, the train is going to wreck sooner or later - just delaying the pain only.
This is the most power fact we all need to remember - worldwide foodstuffs inventory drop to half and no significant supply is coming on stream. Take a look at this table.
Now you know why Jim Rogers continue to buy agriculture?
As many recalls, most of the CPI rise is coming from food and fuel. Food price is not going back-off in the long-term. These two devils were the same devils that causing sky-rocketed inflation havoc in the 70s.
The worldwide inflation on YoY change is quite telling -- no country can escape inflation when food and fuel rising prices hit the main streets. We already witnessing streets demonstration from Egypt to Indonesia.
The Fed said they understand more about inflation today compared to the past not letting longterm inflation expectations anchored. I am not exactly sure how he is going to "manipulate" masses to eliminate long-term inflation expectations. When demand exceeds supply, we are going to pay for it. This is Econ 101.
2. China factor is indeed a very powerful one. They are consuming significant of world's commodities - hard and soft. See chart. Consuming more than 20% of many of the world commodities it is not something we should take it lightly. Thank God they consume only 9% of the oil else this is going to put more pressure on us. This is the reason why I think we all should back-off a little from going long on oils. I don't think they are going to slow down their consumption significantly in the foreseeable future.
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How to buy agricultural stock or index in Malaysia?
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