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2018-02-14 09:33 by Karl Denninger
in Consumer , 143 references
[Comments enabled]  

I love it when the lie factory comes unraveled.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.1 percent before seasonal adjustment.

May I note that there is no seasonal adjustment on an annual basis since January is January every single year.  The Bureau of Lies and Scams tripped over themselves and emitted a truth for once -- they lie, repeatedly and intentionally.

Betcha didn't notice.

Nonetheless there were some large movers in the data.  One you almost-certainly know about -- gasoline and diesel.  But one you probably don't pay attention to (unless you are in the Northeast) fuel oil, which, I remind you, is chemically identical to diesel.  That is up nearly 25% annualized.

And what does diesel move?  Damn near everything in the economy.

Do remember that one of the siren song warnings in 2007 was the sharp move in fuel.  Not just gasoline, diesel.  Yes, it was of course precipitated by the same sharp move in oil prices, but do not stick your head in the sand on this one; it's real, it's a real drag on the economy and no, it's not positive no matter how loudly some market "callers" will claim otherwise.

The other stunner is car insurance.  I've warned on this one before; up 8.5% annualized, and 1.2% last month.  Then there's shelter, mostly rent -- up 3.7%.  Gee, is that all price or are real estate taxes part of it too?  You know damn well which is the case.

Hospital "services" are claimed to be up 6% annualized, which I might remind you means the cost doubles about every 12 years.  How many more doublings do you think we can take in the federal and state budgets?  And, by the way, that's just services, which are all soft numbers -- in other words bloating the staff of same with people who never provide a single second of care to a single person of course reflects back on service cost.  But that's a "good thing", we're told, in the employment report.


Incidentally if you're wondering what technological advancement should do to medical care, since it's all in some way technology based these days, absent illegal cartel behavior please look here:

That would be a nearly-11% decrease annually in Televisions, which has been going on more-or-less constantly for a couple of decades, and a similar and even more dramatic decrease in audio gear.  The simple fact is that the definition of technological advancement is doing more with less and that reflects directly into prices.

Unless you're an illegal cartel, which the entire medical and dental system is, and if the government will not stop it then it all ought to be burned to the ****ing ground by the people -- and it would be if the people of this nation could find two working neurons to rub together which, it is quite clear over the previous couple of decades, they cannot.

Good luck folks -- you're gonna need it.

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2018-01-28 10:22 by Karl Denninger
in Consumer , 220 references
[Comments enabled]  

... if anything, about the economy and consumer?

Quite a lot, actually.

The company has run out of excuses, for openers.  The last excuse was "mobile execution issues" that led to delays with people getting their coffees that ordered "in advance" on their mobile app.  Well, that excuse is now gone, and yet what we have is very slow sales growth in the months in which more people are out in the mall and thus inclined to stop and have a coffee in said Starbucks location!

If there's a quarter where sequential sales growth should occur it's this last one that was just reported.

Now add onto that one interesting change, which is that for the first time ever Starbucks actually now has a credible espresso offering.  I'm talking about their "blonde" deal, which I tried a couple of days ago.  It's much improved over their "classic", which has always been burnt and horrid.

The problem remains that their drinks are "kitchy" instead of good; just like McDonalds you'll always know what you're going to get but it will always sort of suck.  That's what the company sells -- not excellence -- because excellence costs money, especially in this space.

Nobody has ever "cracked the code" on producing truly good espresso from an "automated" machine.  There are simply too many variables as I'll go through again.

First, the exact level of roast varies a bit.  Even the best automated equipment (or manual supervision) cannot obtain exactly the same level of roast, and it matters quite a bit.  Starbucks has always cheated and intentionally burnt their espresso; it is done for yield management because freshly-roasted coffee is only good for about 2 weeks from time of roasting until it has to be thrown out.  You can tell instantly in a properly-brewed espresso shot if the beans are too old as there will be little or no "crema", the layer of foam, on the top.  This makes for a nasty inventory management problem unless you roast in-store, and that requires skilled operators (the roasters are relatively expensive and require a fair degree of skill to operate properly; you can't pay someone $10/hour to do that job as they will suck at it.)

Second, the water varies a bit, and the bit makes a large difference in taste.

Third, the grind matters.  It should take 20-25 seconds for a shot pulled at between 8-9 bar (yes, pressure is that high in an espresso machine) to complete.  Too short or too long and the taste is severely impacted.  Very small differences in the coarseness of the grind make a large difference in how quickly the shot pulls.

Fourth, the temperature of the water matters.  A lot, and very small differences are also critical.  The exact temperature to pull a shot at varies between approximately 190 - 205F but exactly where depends on the above three parameters along with the exact bean set in use.  The tolerance on this for a truly good extraction is about 1 degree Fahrenheit!

If everything is exactly right you get just a hint of chocolate taste in the shot -- but there's no chocolate in a coffee bean!  If it's off one way or the other you get a highly-acidic taste (yuck), a very bitter taste (yuck again) or worst of all, a burnt taste (burnt charcoal in your mouth, basically.)

Starbucks has never produced a shot that I could drink and detect that chocolate in.  Ever.

But, their "blonde" the other day was in the "bit of sweetener required" category to be drinkable rather than the "dump three packets of the pink crap in there for a double" sort that usually marks their bilge-water.  I happened to be in Gatlinburg skiing and the must have caffeine alarm went off, so I did an evil thing and went in a place I hate.

I was quite surprised as it was a hell of an improvement.

No, it won't lure me into their stores, since there is nothing the company can do to reverse their political hacksterism that has caused me to say "no, no and no" to the company -- but in terms of actual drinkable coffee it's a big improvement .

The point here is that it didn't translate into sales among those who do find the firm's policies to be ok with them.....

When you improve your product -- and not just a little either -- and yet fail to attract more sales by doing so there is something critically wrong and it is probably not company-specific.

Pay attention folks; the day of the $5 coffee may in fact be over simply on the economic squeeze factor despite what Trump and Corrupt Never Been Sentient tries to tell you about the consumer and his or her alleged "health."

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