They say timing is everything and I tend to agree with that assessment. Timing is also about awareness because in most situations the best move is not making one at all and it takes both experience and wisdom to know when things are different.
If you run a business ask yourself: Does it feel like one of those moments?
This is one of those rare moments in history where decades worth of change happen in just days or weeks causing convulsions in prices and massive dislocation in the way consumers spend their money. Many of my business owners are having to adjust the way they do business in so many different aspects of their daily routines. Suppliers are demanding up-front payments much more than before and many products are either unavailable in the same quantities or prohibitively more expensive.
"For additional context, we’ve also examined gas station visitation trends. According to our Nationwide Gas Station Index, which includes almost 50,000 gas station chains across the United States, overall visits to gas stations have also decreased over the past several weeks. While continued work-and school-from-home trends may nullify some of the impacts of higher gas prices, the decrease in gas station foot traffic may also have implications in terms of broader consumer spending patterns."
For decades now both interest rates and consumer price increases were low and in sync with increases in average incomes. Now we're seeing a decoupling of inflation with interest rates and inflation. For example, in 1981 when inflation was around the 8% level just like it is now the interest rates were 11.5%(!) Now they're just 3.5%. See what I mean about timing? How long do you suppose that gap will last??
Businesses ordering chemicals from China today or Computer chips will pay now locking in the price before their products are shipped. If they're using borrowed dollars even at higher rates they stand to make a profit because the cost will have likely increased by the time their shipment arrives. This is a profound change from the way things were before. As recently as 6 months ago all of my businesses owners were concerned with price compression and competitiveness; now it's more about accessing quantities and using fixed-rate working capital to buy them at any price.
In my previous blog posts last week I went into some of the factors causing the rapid depreciation of our dollar's purchasing power. That dynamic just went into overdrive when Putin decided to demand payment for Russian Oil & Gas exclusively in Rubles (the Russian currency). Other countries like India, China, Brazil and others representing the majority of humans on earth have all decided that's "no problem" at all.
Anyone who believes our Dollars will survive this and continue on as before with nearly negative interest rates, unlimited new currency printing power and negligible effect on our buying power is delusional.
“Since they adopted sanctions against us, we’re going to f**k them. Now they’ll have to buy rubles on the Moscow Exchange to buy gas from us. But that's just the beginning. Now we're going to f**k them all.” - High ranking Russian Official, 03/27/2022
For those who have good credit and can use leverage by all means do so; right now rates may look high but just look at how high the prices are for all your stuff! The window will NOT stay open forever, get fixed rates and buy all you can now. - Call me, you should all know my number by now!