AK Steel increases prices on carbon steel products

AK Steel (AKS) is increasing prices yet again. Effective today and starting with new orders, AKS announced: “…it will increase current spot market base prices for all carbon flat-rolled steel products…Base prices for carbon flat-rolled products will increase by $40 per ton.” AKS explained the reason for this price hike as a “…response to increased demand for carbon steel products, as well as the need to recover higher costs for steelmaking inputs.”

Since July, 2010, AKS has increased prices at least 10 times: four increases for carbon steel products and six increases in surcharges for electrical and stainless steel.

Full disclosure: author owns shares in AKS

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Now showing – higher prices at Netflix

Netflix (NFLX) is increasing the price it charges for its 1-DVD and 2-DVDs out at a time plans by $1. Its 3 DVDs-plan will increase by $3 to $19.99.

See “Netflix offers stream-only service, hikes prices


China continues to lose its fight against inflation

We have chronicled on these pages China’s struggles with inflation. It appears the pressures are only getting worse. Bloomberg reports “China Inflation May Be Too Hot for Controls Amid Cash Glut“:

“Standing near his 12-table noodle shop on Beijing’s Yonghegong Avenue, owner Liu Heliang says meat and vegetable prices have climbed 10 percent in a year and staff wages are up 40 percent.”

“Premier Wen Jiabao’s cabinet last week announced it will sell grain, cooking-oil and sugar reserves, ordered an end to tolls on trucks carrying produce and threatened price controls to rein in a 10 percent inflation rate for food. Because the measures would do nothing to counter the 54 percent surge in money supply over the past two years, the risk is they will prove insufficient to cope with the challenge.”

It seems consumption is declining in the wake of this inflation, but not fast enough to cool prices down. The Chinese government is worrying even more about what will happen to the many millions of poor people who may no longer be able to afford the little food that they currently consume.


Wal-Mart’s “Always Low” prices starting to edge up.

Patrick McKeever of MKM Partners says prices at Wal-Mart have edged higher in recent months:

In a note last week, retail analyst Patrick McKeever of MKM Partners, identified what he calls a “small, but meaningful increase” in the price of 86 Wal-Mart items he tracks on a regulator basis. The average price is up 0.6 percent in the last two months. On an annual rate, that’s about a four percent inflation rate.

Photographic evidence here.


Inflation hidden in higher unit costs

Thanks to Tim Ianoco for posting a link to this article from Fortune: “Why your toilet paper is shrinking“.

In this short post, Fortune provides a detailed diagram showing how companies have held product prices steady but have shrunk toilet paper rolls to cover the higher costs of pulp and shipping. In other words, the per unit cost (square inch of toilet paper) has increased, but this increase is not reflected in the final price, but in the lower amount of product provided at that price. This is a common tactic to disguise the inflated price of a good to maintain the appearance of price competitiveness. Just one more way in which an apparently benign pricing environment is actually sitting on top of roiling pricing pressures.


What is going on in Silicon Valley?

Consider:

  • Tired of defections to Facebook and elsewhere, Google is offering all of its employees a 10 percent salary increase.
  • Twenty-five employees fired by Digg were immediately approached by other companies, including Twitter and Groupon.
  • Talented college grads with no work experience are reportedly getting job offers paying $120,000 or (much)  more.
  • I.T. job postings are booming.
  • Start-ups are being acquired just for their employees. Derek Andersen: “[L]ook at the number of companies getting acquired for talent by Google, Facebook, and now LinkedIn. Seems like someone is getting bought for talent every other week. It hasn’t been that way for a couple of years. A top tier developer friend recently told me that he’s been encouraged by many to start a company and sell to Google/Yahoo in 6-months for a big check just to acquire the team. I believe it’s 100% realistic.”

Something is happening here, and it sure ain’t deflation.

Related:

Is The Silicon Valley Talent Shortage Getting Worse?

Silicon Valley and the  Talent Crunch


As inflation expectations continue to rise, long bond continues to sag

Prices of long-dated treasuries continue to fall, meaning yields are rising. Below is the chart for the iShares Barclays 20-year Treasury Bond Fund (ticker: TLT).

TLT is looking sickly lately

The interest rate on the 30-year treasury bond is now 4.25 percent, up from 3.52 percent on August 31, 2010. (Disclosure: the author is currently long TLT.)