Thursday, November 10, 2011

French Yields Start to Rise.... and Thanksgiving Dinner Cost Went up 13.4% - Shhh, Don't tell the Government Statistics Offices

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Two completely different themes in this post

First, in Europe, the country I've been highlighting for a year now is finally getting attention - France.  Yields are starting to pop - 25 basis points to 3.45%.  While the absolute number is not bad a 25 basis point in a 'stable' country such as France is pretty shocking.  Yields versus German paper have also widened to 170 basis points.

I have been harping on France all this time due to this chart I saw a few years back. [Feb 5, 2010: Sovereign Risk Chart - Where Would the U.S. Fit In, on Europe's Scale?]  Pop it open and look who is sitting next to Portugal.



Yes the U.S. is "worse" but we can never technically default because we can print our currency to our heart's content.  Same with the U.K. - hence no "bond vigilantes" will ever visit us - we just debase the savers in the country (and our creditors) little by little, day by day.   Which is the issue for those in the EU - they can't do that....until this crisis hits France at which point I believe the ECB cries uncle.  We'll see.

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Meanwhile back in the States, the cost of a Thanksgiving dinner is up 13.4% year over year.  Unlike all other food items which the government "statistically analyzes" away, there is no substitution effect happening at your Thanksgiving dinner.  Since we are keeping a constant basket of goods for Thanksgiving dinner (which is how inflation should be measured IMO) real inflation is showing up - whereas in our government reports, if turkey gets too expensive, you move down to SPAM.  Or tuna.

  • AFBF’s 26th annual informal price survey of classic items found on the Thanksgiving Day dinner table indicates the average cost of this year’s feast for 10 is $49.20, a $5.73 price increase from last year’s average of $43.47.
  • The AFBF survey shopping list includes turkey, bread stuffing, sweet potatoes, rolls with butter, peas, cranberries, a relish tray of carrots and celery, pumpkin pie with whipped cream, and beverages of coffee and milk, all in quantities sufficient to serve a family of 10. There is also plenty for leftovers.
  • The big ticket item – a 16-pound turkey – came in at $21.57 this year. That was roughly $1.35 per pound, an increase of about 25 cents per pound, or a total of $3.91 per whole turkey, compared to 2010.  The whole bird was the biggest contributor to the final total, showing the largest price increase compared to last year.  “Turkey prices are higher this year primarily due to strong consumer demand both here in the U.S. and globally,” said John Anderson, an AFBF senior economist.
  • In addition, “the era of grocers holding the line on retail food cost increases is basically over,” Anderson explained. “Retailers are being more aggressive about passing on higher costs for shipping, processing and storing food to consumers, although turkeys may still be featured in special sales and promotions close to Thanksgiving. 
  • The 13 percent increase in the national average cost reported this year by Farm Bureau for a classic Thanksgiving dinner is somewhat higher but still tracks closely with the organization’s 2011 quarterly marketbasket food survey.

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