Pete Kendall's Socio Times: A Socionomic Commentary

August 20, 2007
Coffee Hits $15              at the Pump
Peak bean? Latte at Caffe Artigiano How far will they push addicts like me?
A guy like me gets pretty smug when gas prices rise. Yes, I have a car, but that's mostly so I can park it at the curb and pay the occasional fine. Living downtown it's easier to walk or cycle, so my periodic petrol purchases don't put much of a dent in my wallet. Mere financial fender-benders. The bitter tears of the bridge-and-tunnel crowd are mother's milk to me.

But today I'm scared. Because now the price of fuel is really going up. The $15 cup of coffee has arrived.

It was probably inevitable that someone would figure out it's possible to charge 15 bucks for a cup of coffee and make it stick. In Vancouver, Caffe Artigiano and 49th Parallel Roasters are those people. Amid much media fanfare, they recently introduced Hacienda la Esmeralda Especial, a Panamanian bean named "world's best coffee" at the Specialty Coffee Association of America's Roasters Guild Competition.

As it turns out, the price seems to have been right. Inside of a week, the initial consignment of 80 pounds was almost sold out. Add in the huge media coverage, and a modest financial gamble has paid off handsomely for Caffe Artigiano and 49th Parallel. And for some of us, Gabriel's trumpet has sounded. Armageddon looms.

August 2007
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Wake Up and Smell The $15 Cup of Coffee; This Is Not a Major Low
Category: NEWS
By: Pete Kendall, August 21, 2007
[Starbucks] has turned down from a May 5 [2006] peak in a form that is consistent with a long-term peak.
The Elliott Wave Financial Forecast, August 2006

And I thought that $5 for a cup of coffee was over the top.
--Hedley Goldsworthy, Victoria B.C., Canada

We think you’re right this time. In addition to the $15 dollar cup of coffee, The Elliott Wave Financial Forecast identified further evidence of a peak in Starbuck's stock chart. We thought its long rise was over back in July 2006 when we ran this stock chart.

java jolt

But Starbucks managed to rally to one more slight new all-time high.


This second chart shows that since then, however, Starbucks has fallen below last July’s low in a manner that subscribers will recognize as a very significant five-wave decline. It should be followed by further declines for Starbucks and the overall market, possibly quite soon.

Paying $15 for a cup of coffee is a double signal as it strongly suggests that the demand for luxuries is “over the top,” too. As we’ve noted in several recent issues of EWFF and the June 10 Socio Times entry (click here to view), the luxury boom appears to be reversing. One key confirmation comes from Coach Inc., the maker of Soho and Ergo purses. Suddenly demand for what was until very recently a must-have accessory, is slowing down. Coach’s chief executive officer says growth in the $7 billion industry may fall by as much as half. We say his estimate is way too high. As the cash thirst discussed here on Friday intensifies, the demand for pocket books to stash spare cash in will recede at a fast rate. As EWFF noted in May, “hedge funds are at the epicenter” of the binge, and the experience of one London fund manager is probably indicative of what will happen to the preoccupation with extravagance as the markets head down. For several weeks, the founder of SPQR Capital didn’t even notice that his $160,000 Maserati Cambiocorsa had been impounded for unpaid tickets and taxes. “I was distracted by the market turmoil,” said the fund manager. The expanding scope of the distractions confirms the last line from May’s Special Report, “At the Pinnacle of the Great Pyramid”: “This may be the end of the line for luxury.”

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In Australia we have the $50 cup of coffee. The beans are imported from Indonesia after they have passed through the digestive system of a local animal. Apparently this intensifies the taste. Not my cup of tea though. Cheers
Posted by: Les Noon
August 21, 2007 03:00 PM

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