Consumer prices increased 8.5% in March, the fastest inflation rate in 41 years. The increase was fueled by a jump in gas prices tied to Russia’s invasion of Ukraine, along with rising costs for food and rent.
The Fed looked at the report and reiterated its threat to hike interest rates 0.5%, which is aggressive and historically unusual. Several firms on Wall Street looked at the report and are convinced another 40% rise with the commodity markets is at hand.
The report data is keeping inflation and commodity news on everyone’s lips.
The last time such a scenario surfaced was in the mid-1970s to early 1980s. It was back then when inflation was out of control while the economy was bogged down with slow growth that led to the stock market falling 57%.
Soaring commodity markets and inflation was on everyone’s lips and talked about daily. And such discussions led to songs being written and movies made about the commodity markets.
The most famous movie about the commodity markets was “Trading Places,” a 1983 comedy starring Eddie Murphy, Dan Aykroyd and Jamie Lee Curtis. The film tells the story of an upper-class commodities broker (Aykroyd) and a down-on-his-luck poor street hustler (Murphy) that traded places.
It was the fourth highest grossing film that year and was a big hit. The film was about the commodity markets that were on everyone’s lips at the time.
A few years earlier, in 1975, The Eagles released a song entitled “Take It to the Limit.” There was nothing in the song about commodities. However, in the commodity futures markets there are regulations that limit how high or how low a market can rise or fall in any one day.
Many commodity traders back in 1975 and onward would sing at the top of their voice the name of that song as a battle cry. When a market would rise or fall sharply, they would sing, “Take it to the limit, one more time!” Again, the commodity markets were on everyone’s lips.
And in 1975, as inflation was soaring and the U.S. economy was leaking badly, country music artist Tom T. Hall composed and recorded a song entitled “Faster Horses (the Cowboy and the Poet),” now considered one of the top 100 western songs of all time.
The song is about a young poet that meets a weathered, old cowboy in a bar and asks if the cowboy could share the mysteries of life. The grizzled, old cowboy looks down, spits between his boots and says, “It’s faster horses, younger women, older whiskey, and more money.”
Back in the mid-’70s oftentimes things were not politically correct, but when I say, and with conviction, that everyone in the commodity futures markets would utter that line daily, it is the truth.
Every day someone in a loud and clear voice would sing, “It’s faster horses, younger women, older whiskey, and more money.” After all, inflation, the commodity markets and making money were on everyone’s lips, hearts and in their minds.
And I remember vividly when the late, great Ray Charles in 1994 released a song called “Busted” that touched on the commodity markets.
Ray with his own imitable style, head swaying back, eyes clenched tight, and moving back and forth from his waist to his shoulders, would sing: “My bills are all due and the baby needs shoes and I’m busted. Cotton is down to a quarter a pound, but I’m busted. I got a cow that went dry and a hen that won’t lay, a big stack of bills that gets bigger each day. The county’s gonna haul my belongings away cause I’m busted.”
That song still rings a bell with a number of commodity market investors and traders, which is understandable. After all, even back in 1994, inflation and the commodity markets were still on everyone’s lips because of the impact they had on the economy and individual families from years before.
This week’s inflation data showing the highest level since 1981 has some making the argument that it cannot get worse. Others argue that inflation will be around for years to come and may surge even higher before cooling down.
I am in the camp that expects inflation to linger for years. But even in the years ahead with inflation and the commodity markets on everyone’s lips I refuse to sing, “It’s faster horses, younger women, older whiskey, and more money.”
Well, I may sing it in the shower occasionally — but nowhere else!