Price Levels, Not Deltas

by Karl Denninger

It seems the market is more than a bit unrealistic the last week or so as it has rocketed higher on alleged-“cooler” inflation figures.

We stand roughly 400 points in the SPX — or nearly 10% — higher just in the last couple of weeks, leaving gaps all over the chart on the way up. But stocks are supposed to represent an income stream from operating profits, so this begs the question: What profits?

When I go to the grocery store the register tape — and my Quicken — says I’m spending a lot more money there. Not a couple of percent over the last 12 months, an obscene increase. Shelf prices are one thing, but actual paid prices are truth — and those involve discounts, coupons, BOGOs and similar. I, like most people, buy pretty much the same things to eat. Spending over the last 12 months is in fact up more than 30%, not 2%.

Car insurance is claimed to be up about 20% — and it is. That’s real, and everyone with a car has had to pay it.

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