Pretend it's 1933, as so many in the deflation camp think it is or soon will be (at least from the price-of-everything standpoint). If last Wednesday you reached for a copy of that day's Financial Times, would you have expected to see the following headline -- "Steel prices set to soar: Everyday goods will cost more" -- in large print above the fold?
I don't think so.
The newspaper went on to say: "Global steel prices are set to rise by up to a third, pushing up the cost of everyday goods from cars to domestic appliances, after miners and steelmakers yesterday agreed to a ground-breaking change in the iron ore price system."
All along, as I've talked about money printing, I have said it was not possible to explain in advance which goods would climb in price (or when). I just knew that as the new money was put into circulation, prices would ultimately rise. Now they have, to some degree, for various items. Steel is a great example along with other base metals, oil, health care, insurance and taxes.
I'm not trying to claim the rate of inflation is ready to ramp up drastically. But there are so many people who are so rabidly dogmatic about deflation -- and very few, except perhaps myself and a small handful of folks who anticipate otherwise (and even I don't expect an imminent rise in inflation) -- that relative to what I think are well-entrenched deflation expectations, this rise in the steel price ought to be a shocking development.
With this ring tone, I thee wed
And now for a business whose products only decline in price over time: cell phones. Last week The Wall Street Journal reported that Apple (AAPL, news, msgs) was building an iPhone for Verizon (VZ, news, msgs).That should have come as no shock. Those who've been paying close attention to the cell phone world have known this was inevitable. Why? Because AT&T's (T, news, msgs) exclusivity agreement with Apple is believed to be ending sometime around June, and Apple has pretty well milked the phone company's subscribers. Thus for Apple to grow, it needs to sell its phone through Verizon.
However, there are a few moving parts to this looming relationship. Verizon has no desire to pay through the nose as AT&T did, so it wants to play up the Droid-Google (GOOG, news, msgs) phone and its much-better network as bargaining chips. That means it may be a while before the terms of the Apple deal are sorted out.
Nobody is more secretive than Apple about what it plans to do next. However, in order to actually produce and introduce its product, Apple needs to enter the phone-production food chain to design and build prototypes, etc. At some point a new product of this magnitude simply can no longer be hidden. That is most likely why we are finding out about it around now.
This is good news for Verizon, and folks who've been getting dividends from that stock are now liable to be in for some capital appreciation, too, over the next year. Apple, as well as Qualcomm (QCOM, news, msgs), which is a beneficiary of CDMA, or code division multiple access, will probably see boosts when this comes to pass (though only Verizon seems like a legitimate bargain).