Thursday, September 24, 2009

Chicken Prices... The Taco Bell Economic Indicator

So I was eating lunch today with my buddies at Taco Bell. I noticed they had this monster chicken combo thing for like $5.49. Then I thought holy shit that's a lot of stuff.... Then my friend Steve mentioned that the Penn Station down the street had all their chicken based items on sale too...
The next thing someone pointed out was that... somehow the Bean Burritos were MORE EXPENSIVE than the chicken burritos...

Thus being MBAs somehow I thought we could turn this into an economic indicator.  I'm guessing that there must be an oversupply or damping of demand for bok bok chicken. Anyhow the next step is to look at Chicken futures prices.... As you can see bok bok chicken's have been taking it in the face lately.  So I can imagine something to the effect of the Bean Burrito Index having a rally while the Chicken Taco Futures is experiencing new 52 week lows...

Thus I theorize that an important technical economic indicator should be based on when the price of chicken/pork/beef crosses the threshold of being cheaper than re-fried beans.  When the Taco Bell trigger event happens beef and chicken burritos become cheaper than bean burritos. This implies an odd divergence between consumer fast food demand and commodity pricing of feed grains.  Basically it implies that short term economic metrics during this time are completely decoupled from fundamentals... It also implies that times are totally sweet if you like Chicken Soft Tacos.

Fernando Z speculates that the drop in chicken demand is related to this breaking news!
Rex T speculates that this is a market manipulation not unlike the Oil Futures action we saw last year.

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