Stagflation: Yes, I Said It

What we must guard for, while wielding our net this way and that, is that stagflation becomes a vogue excuse like cold weather, hot weather, suppliers tripped up by the credit crunch or the shortage of nuts and bolts that has befallen the world. (Yes, I'm talkin' 'bout you, Boeing(BA Quote).)

But don't make the mistake here of thinking Colgate-Palmolive's(CL Quote) modest outperformance in the third quarter put stagflation fears to bed by turning Procter into a liar, liar pants-on-fire. You headline readers might be thrown by unfortunately predictable headlines like this one from Forbes: "Colgate's Minty-Fresh Earnings."

They were fresh, but not totally exciting, delighting to me.

With even more international exposure than P&G, Colgate benefited even more from the weak dollar and more fragmented competition overseas. That's not to knock its efforts. Colgate is a great company that has done a great job overseas. A strengthened dollar could hurt it good, but, more relevantly to our discussion of stagflation, the overseas bounty masked weakness at home. Moreover -- uh, oh -- prices are a goin' up on a host of basic products from soap to dog food.

For a tour of price increases (don't let the children ride along -- this is haunted house material, real scary) please read The Wall Street Journal's "P&G, Colgate Plan to Increase Prices."

As a slight digression, let's revisit last week's lesson about how headline writers are not allowed, under pain of death, to speak to article writers and how this can throw investors. This Associated Press story hit all the right cautionary notes about P&G, from the rising prices to how dependent its strength was on the weak dollar. But look at the headline: "Colgate, P&G Profits Up."

So let's add Colgate to our collection, now the fourth company we have pinned to the stagflation display board. Also, please join the search party and email me any evidence you see. Because, my friends, this collection is starting to scare me more than my Angelo Mozilo costume will scare any of the children tonight.

Have a Happy Halloween and, most importantly, be safe. It's getting a touch scary out there and I'm not even talking about the goblins and ghouls.