The general rise of bulk commodities pushes up the cost of food, clothing, housing and transportation, and it is inevitable that the United States and Europe will fall into stagflation

The general rise in global commodity prices this year has once triggered market investors’ concerns that the developed economies of the United States and Europe will fall into a “stagflation” predicament after nearly half a century, and the Fed has released excess currency liquidity since last year. Naturally, it is also considered to be the culprit. Although Fed officials have repeatedly emphasized that higher inflation is only a “temporary” situation in the process of economic recovery, the new round of surge in commodity prices led by energy and the transmission to the downstream market since this month has once again made everyone Some can't sit still.

Brent crude oil futures prices broke through the $80 per barrel mark on Tuesday, setting a new high since October 2018. The US natural gas futures price surged 11% on Monday, the largest one-day increase since February, and broke through $6 to hit a new high since 2011. Naturally, rising energy prices have triggered a knock-on effect, which will further push up the prices of various raw materials and agricultural products, and intensify global inflationary pressures.

In this situation, Fed Chairman Powell, who has been accused of downplaying the threat of inflation, also said frankly this week: As the supply bottleneck lasts longer than expected, inflation is expected to remain high in the next few months and may not slow down until after next year. Outside the United States, the energy market is more frantic than expected. European benchmark natural gas prices have risen more than 20 times from their trough last year, while in the Chinese market, the price of thermal coal futures used for power generation has risen above 1,330 per ton this week. Yuan, another record high.

The energy price has the effect of "moving the whole body", and the high-energy-consuming building materials, chemicals and metallurgical industries bear the brunt. The jump in the prices of metal raw materials such as steel and aluminum will be passed on to the industrial product sector. The soaring cost of fertilizer production means that the production cost of cereals in the next season will follow up, and the rise in building materials prices will be passed on to new houses. As a result, every corner of the inflation commodity basket in developed countries is difficult to escape.

In fact, due to the soaring natural gas prices, some fertilizer producers in Europe have been forced to reduce production. It is expected that more fertilizer producers will follow, which may increase farmers' costs and may increase global food inflation. Rising demand, coupled with the impact of extreme weather on harvests, has led to an upward trend in global agricultural prices. In addition to food crops, US cotton futures were close to one dollar per pound on Tuesday, a record high in more than 9 years, which means that the pressure of "stagflation" will explode its power in all areas of food, clothing, housing, and transportation.

This is reminiscent of the 1973-74 round of global oil crisis that caused a severe setback to the Western economy. The problem is that the younger generation of European and American countries have grown up in a low-inflation environment, and the current officials of the Federal Reserve, including the current officials of the Federal Reserve, are limited in their understanding of inflation at the theoretical level. Therefore, it is difficult to ensure that once prices are out of control, they can make correct and decisive regulatory decisions in time to avoid further deterioration of the situation.

At least, Fed Chairman Powell testified before the U.S. Senate Banking Committee on Tuesday that as the economic restart continues, constraints such as supply bottlenecks and recruitment difficulties may once again prove to be more severe and longer-lasting than expected, but these effects are expected to weaken and inflation It will fall back to the longer-term 2% target of the bureau. If there are major concerns about high inflation, the necessary response will be made. In addition, European Central Bank President Lagarde also said that once the impact of the epidemic subsides, inflation will fall, and the bank must not overreact to temporary supply shocks. It still needs loose policies to stimulate the economy.

Once the situation of rising inflation becomes more apparent, precious metal commodities, which act as a medium of value preservation, may be the final winner in the market. Although the current trend of gold prices is still relatively sluggish in the context of the US dollar index being strengthened by the Fed’s tightening expectations, once energy prices continue to soar and double market concerns, precious metal prices will also not rule out the possibility of recurring the big bull market of the 1970s. .