Final Thoughts

Final Thoughts

Written by Tim Triplett

Inflation and COVID have something in common. Both are invisible to the naked eye yet will color the economic picture in 2022. And both may make their presence known next year with painful consequences. Turns out Steel Market Update readers are more fearful of the fiscal bug than the physical one.

Steel Market Update’s questionnaire this week asked: How concerned are you about the potential impact of inflation on the economy next year? About 23% of respondents said they are “very concerned”. The majority, 67%, are “somewhat concerned.” Only 10% are “unconcerned” about the impact of inflation in the coming year.

In comparison – when asked about the potential impact of COVID on the economy next year – only 5% said they are “very concerned.” Approximately 64% are “somewhat concerned.” And nearly a third, 31%, are “unconcerned” about COVID – even as headlines warn of the spreading Omicron variant.

Here are some survey respondents observations about inflation:

“Inflation is a much more significant problem than is being reported.”

“Go try and buy a new car or an appliance. Prices are way up.”

“Inflation will reach 4-5%, a level not seen in 20 years. Many buyers may not know how to react.”

“I believe inflation is temporary and will pull back. My main concern would be government overreactions – trying to control too much and stifling the economy.”

“Inflation will subside in 2022; year-over-year comparisons are inflated due to the 2020 COVID lockdowns.”

And here are their observations about COVID:

“Another wave of COVID may close down sectors of the economy.”

“COVID will be a dominant overriding factor for a while. As countries lock down, it will affect everyone. As people get sick or die, it will remain a very real concern.”

“I firmly believe the worst is behind us, Omicron or not.”

“It isn’t COVID that’s the issue here, it’s the media and government dialogue on COVID that’s driving fear into the public. Make that narrative stop and the economy will rebalance.”

“I’m much more concerned with the incredible labor shortage, which the folks in Washington seem to ignore.”

Inflation and COVID have something else in common, unfortunately. As some of the comments suggest, both have become political flash points, which only worsen the divisions between Americans at a time when we should be united against these two big threats to our prosperity.

I also see one big difference between the two. If you could go get a shot that would make you immune from inflation, who wouldn’t gladly roll up their sleeve?

Can Sentiment Be Too Sunny?

I think I may have gotten a whiff of “irrational exuberance” when editing SMU’s Steel Buyers Sentiment numbers this week. As you’ll recall, that is a phrase coined by former Fed Chair Alan Greenspan warning of the dot-com bubble in the 1990s. By definition, it usually refers to investors whose enthusiasm drives stock prices higher than justified by market fundamentals. I think the phrase might have some relevance to steel prices today.

SMU’s Current Buyers Sentiment Index is at a reading of +75 this week, while Future Sentiment is at +70 – both still within shouting distance of their all-time highs. I’m all for positivity, and I understand many companies are basking in the glow of their best year ever. But steel prices, without a doubt, are on the way down. (How far and how fast is up for debate.) And that should be cause for concern – and the appropriate planning and strategizing. I would hope and expect to see more “cautious optimism” in the future sentiment numbers in the weeks and months ahead.

Upcoming SMU Events

SMU’s next Introduction to Steel Hedging workshop, set for Feb. 14-15, will be a live event held alongside the Tampa Steel Conference on Feb. 14-16. Give yourself the gift of a trip to sunny Florida in February and plan to take in both events for the cost of one plane ticket. Email if you have additional questions on the programs, registration fees and discounts.

As always, we appreciate your business.

By Tim Triplett,


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