Anti-core inflation. Olive oil mega farms and the unbearable tweetability of Adorno.
Great links, images and reading from Chartbook Newsletter by Adam Tooze
Hi, thank you for opening the Chartbook email.
Tonia Nneji, Far from Here, 2020, oil on canvas, 34 × 24", Source: Art Forum.
Anti-core inflation as insult - a very useful concept from John Authers
The crux of the issue for many consumers (explained to Authers by Jean Ergas of Tigress Financial Partners) isn’t headline or core inflation, but food and fuel. As these are exactly the categories excluded from the usual definition of the core, let’s call an index of combined food and fuel the “anti-core.” There’s a reason why central bankers find them useful to exclude, and it’s not because they don’t care; rather, food and fuel tend to be highly variable, and are in many ways beyond the reach of monetary policy. There’s also a reason why people outside central banks tend to care about them a lot. These are things that they have to buy, generally at least once a week, and any change hurts quickly. As Ergas puts it, inflation in these essentials is experienced by many as a further disenfranchisement, as adding insult to injury. The Bureau of Labor Statistics doesn’t regularly publish a measure for just food and energy. However, they have indexes for both categories stretching back to the late 1950s. In January 1960, energy stood at 22.4 and food at 29.5. That’s fairly similar. By the end of February this year, energy (327.7) had overtaken food (276.3). Rather than attempt any subtle rebalancing, I produced an “anti-core” index of food plus energy by just adding the two indexes together. I’m sure there are better statistical ways to do this, but there are also many worse ways of gauging just how painful inflation feels to consumers. … the spike in the summer of 2022 was quite something. Indeed, it was the worst anti-core inflation in 42 years; it was higher even than during the horrors of the oil crisis of the 1970s. … Meanwhile, the latest Michigan sentiment survey continued to show an extraordinary rise in the mean estimate of inflation over the next five years. This is distinct from the median, and is driven by a significant coterie of respondents who think inflation is going to take off in a big way. It’s also possible that Michigan’s shift to online surveying has affected the outcome. But still, if the average consumer thinks inflation will be 7% in five years’ time, that looks like trouble. … it … shows tellingly how trust on inflation has been ruptured.
Sources 1: Bloomberg, Sources 2: Bloomberg
Jamie Dimon for Treasury Secretary: The Idea That Never Fades Hannah Levitt
And within a few weeks, Trump took to his Truth Social platform to beat back talk that he might tap Dimon to run the Treasury. “I don’t know who said it, or where it came from, perhaps the Radical Left, but I never discussed, or thought of, Jamie Dimon,” the candidate wrote. More recently, Trump was telling the Economic Club of New York that he would do a better job keeping America safe from nuclear war when he called out to Dimon in the room. At that moment, Dimon was on a plane.
There’s no doubt that some Republicans would be receptive to Dimon. Years ago, when he was summoned to Capitol Hill to be grilled over JPMorgan’s multibillion-dollar losses on botched trades known as the London Whale debacle, the public hearing took an unexpected turn. Several Republicans asked his advice on how to regulate banks.
Source: Bloomberg
A turning point in historic olive oil production? (Barney Jopson in Montefrío and Amy Kazmin)
The cradle of global olive oil production is a sun-beaten range of hills in southern Spain, each plot studded with fruit-bearing trees as far as the eye can see. It is also the setting for a commercial battle over the €14bn industry’s future. … the trees — among nature’s hardiest survivors — are parched and diverting water to their core … A brutal drought last year resulted in dead olives and a meagre autumn-winter harvest. … But as climate change makes droughts increasingly likely across southern Europe, … thousands of smallholders … in Andalusia are also facing a threat from a new and rapidly expanding source: a wave of mega farm rivals. The “super intensive” operations are trying to capitalise on olive oil prices that remain close to record highs hit earlier this year. They boast rows of trees in tightly packed lines on flat land close to rivers or reservoirs. This allows for irrigation — critical during a drought and something that most smallholders can only dream of — and machine harvesting. That means lower costs, higher productivity and bigger profits. In the past two decades they have expanded from nowhere to account for 7 per cent of Spain’s olive terrain and 11 per cent of production … They are also spreading north beyond Andalusia and attracting capital from big olive oil groups such as Innoliva and De Prado. … Mega olive farms have also proliferated as landowners, concerned about climate change, switch from citrus fruits, cereals and root vegetables to olives, which can handle water stress better than most other crops. … The rush to get into olive farming has been accelerated by high prices and the promise of new markets. Industry executives are courting millions of potential new consumers outside Spain and Italy, mainly in the US and northern Europe where … Super high-density olive farms are also attractive to investors in Italy, the world’s second-biggest olive oil producer after Spain. Capital is flowing in from private equity firms such as Milan-based DeA Capital, historic winemaking families and bottling companies. Land devoted to high-tech olive cultivation in Italy is still tiny, accounting for just 15,000 hectares out of 1mn hectares of olive trees. But … “Sooner or later, super high-density is coming,” … want on your trees, but if there is no one to harvest them, it’s going to remain there.” The super farms offer far superior metrics. While traditional olive growers in Spain have 80 to 120 trees per hectare on average, the mega farms have anywhere from 800 to 2,000 smaller trees. Traditional farms on average produce between 500kg and 850kg of olive oil per hectare, compared with a yield of 1,200kg in the bigger irrigated operations, according to industry figures. Super farms use tractor-like harvesters 4 metres high, which suck the trees into a tunnel of spinning parts that guzzle the olives. … production costs for a typical traditional farmer are €3.80 per kg of olive oil, whereas costs at a typical super farm are half that. … “With five machines I can do the whole estate in five days,” he said. To harvest the same expanse of mountain olives, it could take a team of 10 people 70 to 100 days. Speed brings another advantage. The fruit for extra virgin oil has to come from the first harvest of the year, but if it stays on the tree too long it deteriorates. On a mega farm “you can select the exact moment to harvest” … Smallholder co-operatives and boards that certify regional denominations of oil are fighting back with initiatives such as backing university studies on oil quality and focusing more clearly on health in marketing. …They are pinning their hopes on the olive’s complex relationship with water. Being too hydrated is not good for the fruit. A top-end olive needs to suffer because thirst makes it generate natural preservatives called polyphenols, which mountain olives have in abundance. The polyphenols give extra virgin olive oil the spice and bitterness prized in the Mediterranean. They also provide, along with oleic acid, the antioxidants and anti-inflammatory benefits that a number of scientific studies have shown. … For some new markets, however, that is not necessarily a problem. Deoleo found that US consumers, for example, do not like the light burning sensation that a southern European would expect from a top-quality extra virgin oil.
Source: Financial Times
HEY READERS,
THANK YOU for opening the Chartbook email. I hope it brightens your week.
I enjoy putting out the newsletter, but tbh what keeps this flow going is the generosity of those readers who clicked the subscription button.
If you are a regular reader of long-form Chartbook and Chartbook Top Links, or just enthusiastic about the project, why not think about joining that group? Chip in the equivalent of one cup of coffee per month and help to keep this flow of content coming.
And when you sign up, there are no more irritating “paywalls”
Straight out of Late le Carré
For contributing subscribers only.
Tonia Nneji Forced Prestige, False Prestige, 2021, Source: Art Forum.
26MW - World’s largest wind turbine
For contributing subscribers only.
On the tweetability of Adorno … so right, but, oh, so very, very wrong ;)
“Adorno's philosophy is very tweetable. Didn't he write somewhere that he always tried to express his entire philosophy in every sentence? Minima Moralia reads like a collection of tweets” (Mau)
THINKING THE PAST..., 2021, by Tonia Nneji, Source: Art Forum.
If you have scrolled this far, you know you want to click:
Invite your friends and earn rewards
If you enjoy Chartbook, share it with your friends and earn rewards when they subscribe.