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It never fails to amaze me how the "volatile food and energy" sectors are
ignored when the PPI and CPI are released. Certainly bonds are a bit
oversold, however there is no credible bottom in place. Anyone who follows
the copper and oils markets is not going to go wildly bullish on bonds.
And commodities do not begin to speak to labor costs. I live in a small
(5000), remote, seasonal, mountain community. Most of the working population
has been willing to accept sub-par wages for menial jobs for the opportunity
to live here. The strong economy has propelled a second home construction
boom accompanied by a number of relatively large commercial lodging
projects. Now the labor market has gotten so tight that our tiny paper is
filled with large ads touting high wages and signing bonuses. Community
leaders are talking about building tax-payer subsidized low cost housing to
attract workers. Our club is going to have to raise wages by at least 20% to
halt staff turnover which has become epidemic from top to bottom. With this
being a spill-over economy, I can only imagine what the labor market is like
in larger communities and cities.
Earl
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