The markets are at all time highs (again) Oil prices are coming down (again) Manufacturing in the US is booming (again) but no one is mentioning the supply chain squeeze.
That doesn’t surprise us in the least. Which is why we are bringing it to your attention.
And to that point, we would like paraphrase the iconic line from the soothsayer in Shakespeare’s play, “Julius Caesar”.
Beware the Supply Chain Squeeze
The Institute for Supply Management survey has published some rather frightening news that flies in the face of the manufacturing boom we are seeing.
One electrical-equipment producer said pricing volatility and delivery delays are “arguably worse than the pandemic era,” with both moving relentlessly higher.
On the surface, it sounds all warm and fuzzy when you consider the 15 major manufacturers reported the following increases from:
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Led by computer and electronic products
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Machinery, petroleum and coal products
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And other sectors tied to AI infrastructure, defense, transportation, and capital investment.
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There is genuine demand here, particularly from the construction of data centers
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The AI spending boom, and defense production
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And the reshoring of certain supply chains
But…and this is a very Very Big Butt…
This same expansion is colliding with a supply system that is already strained.
Ironically (or NOT) this is what happens the government publishes sanitized inflation statistics like the manufacturing boom.
Yes, factories are expanding, but the cost and difficulty of obtaining the materials needed to produce anything have become worse than during the supply-chain nightmare of COVID.
A primary-metals manufacturer was even more blunt:
“It makes me yearn for the coronavirus pandemic chaos, which was more manageable than whatever this is that we are in.”
What to Make of a Supply Chain Squeeze…
Manufacturers are telling us In Plain English that the present chaos is less manageable than the Covid Hoax pandemic.
And their testimony matters more than another speech from a politician or economist who has never purchased a ton of steel, shipped a container, operated a factory, or met a payroll.
The US may be entering a powerful manufacturing expansion. But it is doing so with insufficient capacity, unstable supply lines, high borrowing needs, and government spending that refuses to retreat.
And we haven’t even addressed the disruption/blowback and ridiculous spending from the Ukraine and Iran wars.
Don’t expect headlines like: Coming to a neighborhood near you soon.
But keep in mind that markets reaching all-time highs makes for a great Distraction-de-Jour (DdJ).
As a result, most investors who are not paying attention will end up realizing their fate like Julius Caesar’s last words:
“Et tu, Brute? Then fall, Caesar!”
