Thought the following story on DJN was interesting. All we keep hearing is that inflation is low and contained and as a result, we don't need monetary policy shifts. I beg to differ. Inflation is indeed out there and is beginning to be pushed onto the consumer. This will be evident enough shortly. As a result, stay flat to short duration and overweight spread product.
(Dow Jones)- Major consumer goods companies are being forced to reassess their business models in the face of soaring commodity costs as they attempt to minimize damage to profit margins and scale back losses.
Whether through raising prices, cutting costs, adjusting product size or altering ingredient mix, companies such as Unilever PLC (ULVR.LN), Reckitt Benckiser (RB.LN) and Kraft Foods Inc. (KFT) are all having to take action as rising input costs show no sign of abating.
As escalating costs have hit all categories of commodities, no single company is better placed than another, so their differing strategies will be under close scrutiny.
Unilever predicted a 400 basis point hit to full-year margin due to escalating commodity costs while U.S. rival Procter & Gamble (PG) said earlier this month its commodities bill will total $1 billion for the year to the end of June, more than double expectations.
One needs look no further than the rise in ten and thirty year treasuries and the steepening of the curve. Ben, do you shop?
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