| Amir Kahanovitz, Chief Economist, Phoenix-Excellence |
This time investors wanted to be brave, not be intimidated by the variant, and be able to buy at a low. But then came reports that the Omicron strain had arrived in the US, and they did panic: jumped to 31 points.
The one who still weighed on trade was none other than Fed Chairman Jerome Powell – who theoretically should be the one to reassure, but in testimony in the Senate he recalled acknowledging the rise in inflation and the need to hurry with the completion of the bond buying program. No matter how much everyone shouted at him to be quiet, what are you doing, this is not the time – he did not hear …
Having no choice, the market raised the shortfall, into the risk of the corona plague, but lowered it from 2023 north. Perhaps this is the tragic fate, and it is impossible to escape from it. The return to the bottom has fallen since January.
Whoever tried to provide an explanation for this dissonance, between the fear of a deadly and contagious variant and the Fed chairman taking the respirator from the market, was the president of the Fed’s branch in San Francisco, Williams, who said they feared the virus would do more of the same things. Imbalance and demand erupts.) On Thursday morning, investors are once again trying to zone out and buy low, but Nomura Investment Bank strategists have written to their clients that buying into the declines today may not turn out to be a good strategy (as in previous variants). Crossed the border for them, and not only will they not support the markets, but will even try to suppress them.
| Inflation in Israel: Suddenly we do not want to raise prices
Diplomat (TASE :), one of the largest distributors in Israel (over 100 different consumer products), stated with the publication of the third quarter that it is not expected to raise prices, when “the company’s suppliers did not raise prices.” Although the company notes a tens of percent increase in transportation prices from Europe and hundreds of percent from China (what do they even import from China?), It has defined their impact as “insignificant.”
It was followed, and perhaps followed, by another major distributor, Wilifood (TASE :), with a similar message: The company’s chairman, Williger, announced at the same time as the publication for the third quarter that
“In recent months, sea freight prices have tripled, but despite this, we have chosen not to roll over the cost to the consumer, and absorb it in our operating profit.”
Is it just a temporary silence, until the Competition Authority’s investigation into the food market goes off the headlines, or are there also economic considerations?
One economic explanation is the strengthening, which of course has a significant impact on importers, but another possible explanation is a marked decline in demand for food products: according to incidental CBS data released this week, the decline in food chain sales continued into October, with a decline of 6.3% Compared to September and seasonally adjusted by 2.2%. In total, according to CBS, food sales fell by 10% from January to October (seasonally adjusted). This is a decrease in terms of a fixed shekel, so if one takes into account the price increases so far in the food section, an even more significant decrease in sales is reflected. In other words, it is likely that businesses will not be in a hurry to raise prices in parallel with a drop in sales – such an action could cause a loss of profit line to be significantly absorbed by the transportation costs they have chosen.
This interpretation is not necessarily an indication of the general cooling, when consumers may have to save on food products in order to be able to meet the price increases of other items, such as perhaps, for example, housing prices.
The author is the Chief Economist of Phoenix-Excellence. This review is provided as a service to readers only, and should not be construed as an offer, recommendation, substitute for the reader’s professional judgment or investment advice or investment marketing, purchase and / or sale and / or holding of the securities and / or financial assets mentioned or of securities and / Or any other financial assets.