Consumer prices rose 8.5% in March, the fastest inflation rate in 41 years. The surge was fueled by a rise in gas prices related to the Russian invasion of Ukraine, as well as rising food and rent costs.
The Fed reviewed the report and reiterated its threat to raise interest rates by 0.5%, which is aggressive and historically unusual. Several Wall Street companies have watched the report and are convinced that another 40% surge in commodity markets is on the horizon.
The report data keeps inflation and commodity news on everyone’s lips.
The last time such a scenario arose was in the mid-1970s to early 1980s. Back when inflation was spiraling out of control and the economy was mired in slow growth, the stock market fell 57%.
Rising commodity markets and inflation were on everyone’s lips and discussed daily. And such discussions led to the writing of songs and the making of films about the commodity markets.
The most famous film 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 commodity broker (Aykroyd) and an unlucky street prostitute (Murphy) who swap places.
It was the fourth highest-grossing film that year and a huge 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, the commodity futures markets have regulations that limit how high or how low a market can rise or fall in a day.
Many commodity traders in 1975 and later sang the name of this song at the top of their lungs as a rallying cry. If a market were to rise or fall sharply, they would sing, “Take it to the limit, one more time!” Again, commodity markets were on everyone’s lips.
And in 1975, with inflation soaring and the US economy faltering badly, country musician Tom T. Hall composed and recorded a song titled “Faster Horses (the Cowboy and the Poet)” that now considered one of the top 100 western songs of all time.
The song is about a young poet who meets a weathered old cowboy in a bar and asks if the cowboy could share life’s secrets. The grey-haired old cowboy looks down, spits between his boots and says, “It’s about faster horses, younger women, older whiskey and more money.”
Back in the mid 1970’s things were often politically incorrect, but when I say with complete confidence that anyone in the commodity futures markets would utter that line every day, that is the truth.
Every day someone sang in a loud and clear voice, “It’s faster horses, younger women, older whiskey and more money.” After all, inflation, commodity markets and making money were on everyone’s lips, hearts and minds.
And I remember vividly when the late great Ray Charles released a song called “Busted” in 1994 that touched on the commodity markets.
Ray, in his own mimicking style, with his head back, squinting eyes and back and forth movements from his waist to his shoulders, sang, “My bills are all due and the baby needs shoes and I’m broken. Cotton has shrunk to a quarter pound but I’m broke. I have a cow that has dried up and a hen that won’t lay eggs, a big stack of bills that’s getting bigger every day. The precinct will be hauling away my stuff because I’m under arrest.”
This song is still ringing for a number of commodity market investors and traders, which is understandable. Because even in 1994, inflation and commodity markets were still on everyone’s lips because they had shaped the economy and individual families for years.
This week’s inflation data, showing the highest level since 1981, has some arguing things can’t get any worse. Others argue that inflation will linger for years and could rise even higher before it cools off.
I’m in the camp that expects inflation to continue for years. But even in the years to come, with inflation and commodity markets on everyone’s lips, I refuse to sing, “It’s faster horses, younger women, older whiskey and more money.”
Well, I might sing it in the shower occasionally – but nowhere else!
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