Based on estimation, our shower cartridge may have been used for at least 14 years. Now it starts dripping. Here we discuss how to remove and replace it (i.e. a Moen shower cartridge).
Before You Start
For any plumbing project, you need to turn off water at the shutoff valve and drain remaining water from the faucet first.
Depending on where you live (i.e., cool or warm area), your water shut-off valves may locate at different areas of your house.[1,2] In a small Texas town where I live now, the main water shut-off value is located inside the meter box near the curb.
In our city, only authorized city personnel are allowed to open and work in the meter box. However, most newer homes in our area have additional shut-off valves located near the house in the flower bed. After locating the valve, you shut if off by turning it clockwise and on by turning it counter-clockwise. Finally, depending on the size of your house, draining remaining water from the pipe may take about 10 minutes.
Choosing the Right Cartridge
As shown in [3], there are different types of Moen cartridge:
1220
1222
1225
Our cartridge has two white wings as shown in the picture and it's a Moen 1222 single handle cartridge (or Posi-Temp).
How to Remove and Replace?
Without repeating, you can watch video's from youtube from the reference list for instructions. Just one additional reminder, if you run into a cartridge which won't be removed easily. you should consider using a core puller as shown above with the removal process (watch [6] for instructions).
To see broad and persistent price inflation in an economy, we generally need two things. The first is a persistent rise in broad money supply, and the second is a physical constraint on our ability to produce more commodities, goods, or services cheaply.
In truth, inflation is all about the destruction of confidence in a fiat currency’s purchasing power. And there is no better way to do that than for the government to massively increase the supply of money and place it directly into the hands of its citizenry. In other words, helicopter money and Modern Monetary Theory (MMT) were deployed—and in a big way. The result was the largest increase of inflation in 40 years.
All 0f the above predications have come true, inflation was reported hitting 9.1% in June on 07/13/2022:[75]
Inflation hit a fresh 40-year record in June, with consumer prices increasing 9.1% over the last 12 months, the Labor Department said Wednesday. It's the fastest increase in prices since November 1981, and above what economists had expected.
If inflation comes, interest rates DO rise. In this article, we will discuss how to invest in a rising rate environment if inflation is expected among market participants.
What's Inflation?
When we talk about inflation/deflation, it is important to know whether we’re talking about monetary inflation (i.e., generally Austrian's view) or price inflation(i.e., generally Keynesian' view).[36] As we have seen recently, a rising money supply is not necessarily accompanied by rising prices (although there is a certain long-term rhythm to the two different measures).
Broad money supply and price inflation are rather correlated. The most precise way to phrase it is that:[74]
Rapid money supply growthis necessary but not sufficient to cause widespread price inflation.
In other words, price inflation always tends to happen when money supply grows very quickly, but a rapid growth in money supply does not always lead to substantial price inflation.
POV—Economists vs Regular People
Jason Furman, Obama's former CEA chief, noted that economists "tend to be less bothered" by inflation than regular people.[73]
At first this seems counterintuitive. After all, economists seem to be talking about inflation all the time. But on the other hand, given the impact of food and gasoline prices, and other highly salient items, on economic sentiment, it's clear that inflation weighs heavily in the minds of the general public.
The one area aspect of inflation that economists do tend to worry quite a lot about isinflation expectations. The fear is not so much that gasoline prices or car prices or meat prices will run hot for a couple years. Their fear is that the public psychology around inflation will change. That we'll see panic buying. That we'll see a price spiral, and that this will have destabilizing effects on general welfare. In this view, Volcker's triumph wasn't that he defeated inflation per se, but that he defeated an inflationary mindset. And so economists are mostly concerned with securing and consolidating that victory.
Figure 1 shows that in the long run, interest rates tend to remain above price inflation (investors need to earn a real rate of return), but it also shows that the wedge between interest rates and price inflation has narrowed on a secular basis. We would argue that this is because over time, the Fed-to-market reaction function has become both more efficient and more credible; it takes a lower interest rate premium today than in the past to hold down inflation expectations.
Inflation and Interest Rate
Interest rates DO rise as a result of price inflation.[15] Over the long term, price inflation (here we use Core CPI; Note that rise in inflation could be made up of rising oil prices which will affect both import and export prices. However, oil is volatile, and the rate of core inflation―ex. food and energy―is the true rate of inflation that the bond marketreacts to and also the one will influence the Fed policy) is by far the best indicator of interest rate trends (Figure 1).[1] A combination of factors has led to a secular lower profile for inflation now than in the 1970s and 80s. These factors include:
A better supply-demand balance in energy markets
The benefits of increasing globalization
At the macro level, globalization has made price inflation slow to emerge, as multinational companies can shift production around the world in response to cost pressure.[17]
The evolution of Fed policies, which now include more effective tools and more timely transmission to the real economy.
These factors have given central banks more room in increasing money supply without facing the price inflation consequences for years. Hence, central banks around the world have become more active in response to economic fluctuations. The consequence is a rising ratio of money supply or credit to GDP. By definition, this means a bigger and bigger financial system, which needs more and more income to survive.
Consumer Price Index
The official measure of price inflation is the Consumer Price Index. The composition of the CPI (consumer price index) is as follows:
However, the definition of CPI was changed substantially to include a different basket of goods, and there was a rapid rise in cheap processed foods that could more easily be mass-produced, at the cost of being less healthy. In addition, money supply could go up a lot without necessarily causing broad price inflation as measured by CPI. In summary, as Lyn Alden pointed out in her article:[74]
Broad money supply and price inflation are quite correlatedwhen there is a period of constrained resources, and can become decoupledwhen resources are unusually abundant for unique circumstances involving some sort of new area of resources or labor rapidly opening up.
Inflation Drivers
What drives price inflation? There are mainly two drivers:
Wage-price spirals
Wage-price spirals refer to the vicious cycle that occurs when rising wages lead producers to raise prices, which in turn, leads workers to demand higher wages, further driving prices higher.
Credit growth and monetary policy
Price inflation is always and everywhere a monetary phenomenon.
Easy credit and loose monetary policy have the potential to create significant inflationary pressure as increasing amounts of capital bid up limited resources.
Recession or Boom? Exposing Hidden Crises in the Mark (YouTube link)
Signs of Inflation[2]
Due to the lagging nature of the CPI and PCE[49,69] reports, they often don’t present the best forward-looking measure of inflation. Like the GDP, they are much better at telling us what has happened rather than what will happen.
Bond yields are very sensitive to inflationary expectations.[65] There are two places we can look for real-time market based inflation expectations are:[48]
The TrueFlation which track inflation based on the prices of goods and services that consumers actually purchase in their daily lives
Based on the data, global investors in aggregate are positioning themselves for roughly 2% inflation in 2021.
Good Inflation vs Bad Inflation
Inflation can be classified into good inflation vs bad inflation:[44]
"Good" inflation is wages rising faster than prices. When wages rise faster than consumer prices, households have more money to spend on consumption, and it's progressively easier for them to pay down debt and support additional borrowing.
In Japan, where the central bank and government have struggled for years to generate price inflation as the means to "re-start growth," wages have fallen by 9% in real terms since 1997.
"Bad" inflation is prices rising while wages stagnate. In "bad" inflation, prices keep rising as central bank money-printing devalues the currency, but wages don't rise along with prices. As a result, wages decline in real terms, i.e. purchasing power.
How to Invest in A Rising Rate Environment?
If you believe inflation is happening, cash is your worst enemy, and bonds can appear less favorable as rising interest rates may decrease the value of outstanding bonds. Instead, you would prefer items like stocks, gold, and real assets, which are historically good inflation hedges.[48]
Strategies employ real assets aim to have either an explicit or implicit return correlation to inflation. Real assets include inflation-linked bonds,[58]commodities[64] and real estate investment trusts (REITs)[70] or other inflation-fighting assets. This can potentially enhance portfolio diversification, mitigate inflation risk and provide more stable real (after-inflation) returns.
In the chart below, Citi bank also shows the 5 year correlations of weekly returns (sector relative returns vs 10 year UST total return). You may also base your investment on the appropriate sectors in a rising interest rate (or higher bond yields) environment.
In another chart below (click to enlarge), Janus' asset allocation model shows the firm's sector preferences in a rising rate environment.[53]
Fiscal stimulus, in Janus' view, would have a more direct impact on the real economy. The firm feels the end result would be an increase in demand-pull inflation. This demand-pull driver combined with the cost-push inflation driven by tighter labor supply and the recent reset of commodities prices to a higher range creates an environment where inflation happens.
In Janus' view, this demand-pull inflation should benefit consumer discretionary names as workers are incentivized to spend. Materials and energy firms should also effectively manage cost-push inflation, especially following the recent uptick in commodity prices.
Recession vs Inflation
Video 1. Will The Coming Recession STOP Inflation? (YouTube link)
Video 2. I-Bonds For Inflation Protection (YouTube link)
The reason why the interest rates are so low? May be that America and the world at large is growing older, retiring, and are choosing to keep their money in government bonds, and other "safe" investments, and more in cash than ever before
If so, low interest rates may not move higher as inflation goes higher as they normally have. They may continue to respond instead to a slowing and unpredictable economy.
War is always inflationary for commodity prices and would only serve to
heat up the economy faster than the new 30-year inflationary cycle would
do on its own.
Such segments include both small caps and certain defensive income
plays, like utilities — both of which have historically proved more
vulnerable to contracting valuations as real rates rise.
Statistically, the rate of increase in current government expenditures at 1.2% per year (i.e., spending growth) from 2010-2014 is historically in the deflationary zone.
Rising rate will cause pain for holders of long-duration bonds. However, in this environment dividend growers – companies with sustainable free cash flow and the ability to raise payouts over time without harming their balance sheets – look attractive.
Due to the floating-rate characteristics discussed int this article, leveraged loans tend to perform well in environments of rising rates (or expected rising rates).
In past inflationary cycles, oils had led cereals by 6 months.
It's understandable why most equity investors domestically focus on cereals when it comes to soft commodity inflation.
The majority of investment options are driven by the top three crops: corn, soybean, wheat, and arguably one could simplify it down to just following the price of corn as a tell.
