HOW many times can we cry WOLF. Here we are again...the start of a new week.....and....the investing world is once again......awaiting the latest comments from THE FED on inflation. It is just ONE BIG MASSIVE attempt at self fulfilling prophesy. Sooner or later someone at the FED will use some language that the markets will jump on and off we go into a correction. As usual....in hindsight.....it is just going to be embarrassing LUNACY. What is actually going to happen is.....we are going to talk ourselves into a bit of inflation by making investors and the public so jumpy that the slightest indicator of an inflation blip will cause a MASSIVE overreaction. It is like the toilet paper run......at the start of the pandemic. SIMPLY LUNACY....there was no reason to hoard toilet paper at that time. BUT....people are NOT rational and herd behavior is NOT rational.
IN FACT......here is a little article on this very scenario....that we are ALREADY seeing across the economy here and in the rest of the world. The World Economy Is Suddenly Running Low on Everything https://finance.yahoo.com/news/world-economy-suddenly-running-low-040118644.html (BOLD is my opinion OR what I consider important content) "A year ago, as the pandemic ravaged country after country and economies shuddered, consumers were the ones panic-buying. Today, on the rebound, it’s companies furiously trying to stock up. Mattress producers to car manufacturers to aluminum foil makers are buying more material than they need to survive the breakneck speed at which demand for goods is recovering and assuage that primal fear of running out. The frenzy is pushing supply chains to the brink of seizing up. Shortages, transportation bottlenecks and price spikes are nearing the highest levels in recent memory, raising concern that a supercharged global economy will stoke inflation. Copper, iron ore and steel. Corn, coffee, wheat and soybeans. Lumber, semiconductors, plastic and cardboard for packaging. The world is seemingly low on all of it. “You name it, and we have a shortage on it,” Tom Linebarger, chairman and chief executive of engine and generator manufacturer Cummins Inc., said on a call this month. Clients are “trying to get everything they can because they see high demand,” Jennifer Rumsey, the Columbus, Indiana-based company’s president, said. “They think it’s going to extend into next year.” The difference between the big crunch of 2021 and past supply disruptions is the sheer magnitude of it, and the fact that there is — as far as anyone can tell — no clear end in sight. Big or small, few businesses are spared. Europe’s largest fleet of trucks, Girteka Logistics, says there’s been a struggle to find enough capacity. Monster Beverage Corp. of Corona, California, is dealing with an aluminum can scarcity. Hong Kong’s MOMAX Technology Ltd. is delaying production of a new product because of a dearth of semiconductors. Further exacerbating the situation is an unusually long and growing list of calamities that have rocked commodities in recent months. A freak accident in the Suez Canal backed up global shipping in March. Drought has wreaked havoc upon agricultural crops. A deep freeze and mass blackout wiped out energy and petrochemicals operations across the central U.S. in February. Less than two weeks ago, hackers brought down the largest fuel pipeline in the U.S., driving gasoline prices above $3 a gallon for the first time since 2014. Now India’s massive Covid-19 outbreak is threatening its biggest ports. For anyone who thinks it’s all going to end in a few months, consider the somewhat obscure U.S. economic indicator known as the Logistics Managers’ Index. The gauge is built on a monthly survey of corporate supply chiefs that asks where they see inventory, transportation and warehouse expenses — the three key components of managing supply chains — now and in 12 months. The current index is at its second-highest level in records dating back to 2016, and the future gauge shows little respite a year from now. The index has proven unnervingly accurate in the past, matching up with actual costs about 90% of the time. To Zac Rogers, who helps compile the index as an assistant professor at Colorado State University’s College of Business, it’s a paradigm shift. In the past, those three areas were optimized for low costs and reliability. Today, with e-commerce demand soaring, warehouses have moved from the cheap outskirts of urban areas to prime parking garages downtown or vacant department-store space where deliveries can be made quickly, albeit with pricier real estate, labor and utilities. Once viewed as liabilities before the pandemic, fatter inventories are in vogue. Transport costs, more volatile than the other two, won’t lighten up until demand does. “Essentially what people are telling us to expect is that it’s going to be hard to get supply up to a place where it matches demand,” Rogers said, “and because of that, we’re going to continue to see some price increases over the next 12 months.” More well-known barometers are starting to reflect the higher costs for households and companies. An index of U.S. consumer prices that excludes food and fuel jumped in April from a month earlier by the most since 1982. At the factory gate, the increase in prices charged by American producers was twice as large as economists expected. Unless companies pass that cost along to consumers and boost productivity, it'll eat into their profit margins. A growing chorus of observers are warning that inflation is bound to quicken. The threat has been enough to send tremors through world capitals, central banks, factories and supermarkets. The U.S. Federal Reserve is facing new questions about when it will hike rates to stave off inflation — and the perceived political risk already threatens to upset President Joe Biden's spending plans. “You bring all of these factors in, and it’s an environment that’s ripe for significant inflation, with limited levers” for monetary authorities to pull, said David Landau, chief product officer at BluJay Solutions, a U.K.-based logistics software and services provider. Policy makers, however, have laid out a number of reasons why they don’t expect inflationary pressures to get out of hand. Fed Governor Lael Brainard said recently that officials should be “patient through the transitory surge.” Among the reasons for calm: The big surges lately are partly blamed on skewed comparisons to the steep drops of a year ago, and many companies that have held the line on price hikes for years remain reticent about them now. What's more, U.S. retail sales stalled in April after a sharp rise in the month earlier, and commodities prices have recently retreated from multi-year highs. Caught in the crosscurrents is Dennis Wolkin, whose family has run a business making crib mattresses for three generations. Economic expansions are usually good for baby bed sales. But the extra demand means little without the key ingredient: foam padding. There has been a run on the kind of polyurethane foam Wolkin uses — in part because of the deep freeze across the U.S. South in February, and because of “companies over-ordering and trying to hoard what they can.” “It’s gotten out of control, especially in the past month,” said Wolkin, vice president of operations at Atlanta-based Colgate Mattress, a 35-employee company that sells products at Target stores and independent retailers. “We’ve never seen anything like this.” Though polyurethane foam is 50% more expensive than it was before the Covid-19 pandemic, Wolkin would buy twice the amount he needs and look for warehouse space rather than reject orders from new customers. “Every company like us is going to overbuy,” he said. Even multinational companies with digital supply-management systems and teams of people monitoring them are just trying to cope. Whirlpool Corp. CEO Marc Bitzer told Bloomberg Television this month its supply chain is “pretty much upside down” and the appliance maker is phasing in price increases. Usually Whirlpool and other large manufacturers produce goods based on incoming orders and forecasts for those sales. Now it’s producing based on what parts are available. “It is anything but efficient or normal, but that is how you have to run it right now,” Bitzer said. “I know there’s talk of a temporary blip, but we do see this elevated for a sustained period.” The strains stretch all the way back to global output of raw materials and may persist because the capacity to produce more of what’s scarce — with either additional capital or labor — is slow and expensive to ramp up. The price of lumber, copper, iron ore and steel have all surged in recent months as supplies constrict in the face of stronger demand from the U.S. and China, the world’s two largest economies. Crude oil is also on the rise, as are the prices of industrial materials from plastics to rubber and chemicals. Some of the increases are already making their ways to the store shelf. Reynolds Consumer Products Inc., the maker of the namesake aluminum foil and Hefty trash bags, is planning another round of price increases — its third in 2021 alone. Food costs are climbing, too. The world’s most consumed edible oil, processed from the fruit of oil palm trees, has jumped by more than 135% in the past year to a record. Soybeans topped $16 a bushel for the first time since 2012. Corn futures hit an eight-year high while wheat futures rose to the highest since 2013. A United Nations gauge of world food costs climbed for an 11th month in April, extending its gain to the highest in seven years. Prices are in their longest advance in more than a decade amid weather worries and a crop-buying spree in China that’s tightening supplies, threatening faster inflation. Earlier this month, the Bloomberg Commodity Spot Index touched the highest level since 2011. A big reason for the rally is a U.S. economy that’s recovering faster than most. The evidence of that is floating off the coast of California, where dozens of container ships are waiting to offload at ports from Oakland to Los Angeles. Most goods are flooding in from China, where government figures last week showed producer prices climbed by the most since 2017 in April, adding to evidence that cost pressures for that nation’s factories pose another risk if those are passed on to retailers and other customers abroad. Across the world’s manufacturing hub of East Asia, the blockages are especially acute. The dearth of semiconductors has already spread from the automotive sector to Asia’s highly complex supply chains for smartphones. John Cheng runs a consumer electronics manufacturer that makes everything from wireless magnetic smartphone chargers to smart home air purifiers. The supply choke has complicated his efforts to develop new products and enter new markets, according to Cheng, the CEO of Hong Kong-based MOMAX, which has about two-thirds of its 300 employees working in a Shenzhen factory. One example: Production of a new power bank for Apple products such as the iPhone, Airpods, iPad and Apple watch has been delayed because of the chip shortage. Instead of proving to be a short-lived disruption, the semiconductor crunch is threatening the broader electronics sector and may start to squeeze Asia’s high-performing export economies, according to Vincent Tsui of Gavekal Research. It’s “not simply the result of a few temporary glitches,” Tsui wrote in a note. “They are more structural in nature, and they affect a whole range of industries, not just automobile production.” In an indication of just how serious the chips crunch is, South Korea plans to spend roughly $450 billion to build the world’s biggest chipmaking base over the next decade. Meanwhile, running full tilt between factories and consumers are the ships, trucks and trains that move parts along a global production process and finished goods to market. Container vessels are running at capacity, pushing ocean cargo rates to record highs and clogging up ports. So much so that Columbia Sportswear Co.’s merchandise shipments were delayed for three weeks and the retailer expects its fall product lineup will arrive late as well. Executives at A.P. Moller-Maersk A/S, the world’s No. 1 container carrier, say they see only a gradual decline in seaborne freight rates for the rest of the year. And even then, they don’t expect a return to the ultra-cheap ocean cargo service of the past decade. More capacity is coming in the form of new ships on order, but they take two or three years to build. HSBC trade economist Shanella Rajanayagam estimates that the surge in container rates over the past year could raise producer prices in the euro zone by as much as 2 percent. Rail and trucking rates are elevated, too. The Cass Freight Index measure of expenditures reached a record in April — its fourth in five months. Spot prices for truckload service are on track to rise 70% in the second quarter from a year earlier, and are set to be up about 30% this year compared with 2020, Todd Fowler, a KeyBanc Capital Markets analyst, said in a May 10 note. “We expect pricing to remain elevated given lean inventories, seasonal demand and improving economic activity, all of which is underpinned by capacity constraints from truck production limitations and driver availability challenges,” Fowler said. What Bloomberg Intelligence Says: “Most modes of freight transportation have pricing power. Supply-demand imbalances should help keep rates high, albeit they should moderate for current unsustainable levels as supply chains improve. This is stressing networks, creating bottlenecks in the supply chains and capacity constraints.”--Lee Klaskow, senior analyst For London-based packaging company DS Smith Plc, challenges are coming from multiple sides. During the pandemic, customers rushed to online purchases, raising demand for its ePack boxes and other shipping materials by 700%. Then came the doubling of its supply costs to 200 euros ($243) a ton for the recycled fiber it uses to make its products. “That’s a significant cost” for a company that buys 4 to 5 million tons of used fiber annually, said Miles Roberts, DS Smith’s group chief executive, who doesn’t see the lockdown-inspired web purchasing as a temporary trend. “The e-commerce that has increased is here to stay.” At Colgate Mattress, Wolkin used to be able to order foam on Mondays and have it delivered on Thursdays. Now, his suppliers can’t promise anything. What’s clear is he can’t sustain the higher input costs forever and still maintain quality. “This is kind of a long-term issue,” Wolkin said. “Inflation is coming — at some point, you’ve got to pass this along.”" MY COMMENT We are seeing the impact of companies and businesses and their "on demand" purchasing and manufacturing systems that have been put in place over the past years. They wanted to NOT hold inventory or parts and supplies. They wanted to operate LEAN. WELL.....now with the re-opening....EVERYONE wants to ramp up immediately.....and...everyone is starting to panic that they will not have enough of their raw materials. So everyone is in a total frenzy to ACQUIRE whatever they can at whatever price they can. Of course....this leads to LESS of many finished products being available.....so wholesalers and consumers will get in a big panic to buy...buy....buy. The result....the IMPRESSION of inflation. A shortage driven mind set. The potential......a BUBBLE DRIVEN economy.....for a while. The......short term...... PANIC ECONOMY.
I’m still shocked by how much pull Elon Musk has on the markets. First it was his influence on the s&p and we were only speculating that the market dragged based on Tesla’s performance when it did. Now this with crypto. At this point I seriously can’t imagine anything that can break his influence on the markets. And he’s still very young and an established business powerhouse. All that and such a huge fanbase and ideas as far as the eye can see, truly a once in a lifetime business leader
It was unintentional....but....the last three posts tie together very nicely. NO....human nature NEVER changes....human behavior never changes.....we will certainly see that proven over the next 6-12 months as the world re-opens. It is very easy to shut down the economy......the trick is re-opening it again. The SAFE SPACE for investors......the long term. The crazier and more frenzied things get.....the slower I will go.
ANYWAY.....the day is young.....and....I dont see anything that is really critical going on. The ACTUAL businesses that I own are STILL the most dominant companies in the world. The 500 largest, most successful companies in the American economy and by extension....the world....are represented in the fund that I own...the SP500. What more can I ask for.....as an investor.
WXYZ , well I took the bait and checked mine too , You are ahead of me in all the time frames , by about 2%-4% , one year your ahead of me by 3.5% The only one I have an edge in is the YTD , Bennett wasn't the one I thinking of , but both my mother and MIL enjoyed his work, must have had 5 or 6 of them hanging around , serigraphs not the originals Every time I threaten to dump DLR it moves up ...............I gotta do that more often
My etf's are taking a beating, I am nooo expert, and don't have time to check all the stocks in each etf , every day. but it just feels like with the flight to higher quality, lower risk stocks lately, that the diversification of ETF's is hurting them. I have noticed the last couple month's that my riskier ETF's , like XLK and XSW have really been taking a beating. Also the last week or so my health care etf, VHT , has been performing pretty well. And REIT's have been performing well. That's just what I have noticed ....................... So far today STOCKS (8 out of 10) UP .01% ETF's ( all dn ) DN .60% but the day is not over ,
Same here with the Bennetts. My parents and in-laws both had a number of them. I still have about six that I unframed and put up. His silkscreens are his originals. He pulled them by hand and they are all different in various ways. There are no originals. The prices on them have collapsed. They peaked many years ago in the late seventies and eighties when the book came out on his life and work.
In 38 years of investing, I've never had warrants show up in my trading account before last week. Weird but thank you. These times are ridiculous. You can buy anything, hold it for 10 minutes, and make a tidy profit. It's like we are being sprayed with money. I can understand why millennials want the government to step in and boost the market, when their portfolio goes down by 0.3%. This market performance is crazy. I am not saying I'm against it.....
Kind of a mini-black Monday for Crypto and Tesla. BUT....most people that participate in this space are used to the volatility......and they will be fine. I wonder more what it says about the investing markets in general.....all the focus on rumor and minute news items and comments by people in the news. Come on......BUCK UP investors. Bitcoin, Bitcoin Stocks Like Coinbase Tumble On Elon Musk Tweets; Tesla Breaks Key Level https://finance.yahoo.com/m/fe732165-6b6e-3352-8630-fd3c743f7f24/bitcoin-bitcoin-stocks-like.html (BOLD is my opinion OR what I consider important content) "Bitcoin and cryptocurrency-related stocks continue to slid after Tesla (TSLA) CEO Elon Musk lit up Twitter over the weekend with comments suggesting the EV maker may have sold its remaining Bitcoin. Musk later clarified that Tesla has not sold any Bitcoin. Within hours of his initial comments, Bitcoin fell below $43,000, according to cryptocurrency tracker Coinbase (COIN). Bitcoin has continued to fall Monday. Musk on Sunday responded to a Twitter user who mused that Bitcoin investors would be furious next quarter when they found out Tesla dumped the rest of its Bitcoin holdings. Tesla stated in its last earnings report it had invested $1.5 billion in Bitcoin and sold 10% of its holdings for a $101 million profit. "With the amount of hate @elonmusk is getting, I wouldn't blame him," the user known as @CryptoWhale added. Musk replied: "Indeed." Musk's posts about Bitcoin came just days after he announced Tesla would halt the use of the digital currency as payment for its cars, citing environmental concerns. "Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy," he wrote Wednesday night. "We are also looking at other cryptocurrencies that use (less than) 1% of Bitcoin's energy/ transaction." Bitcoin Price Falls Bitcoin has tumbled in a volatile fashion over the last several days. The Bitcoin price hit a multi-month low of $42,102.36 Monday afternoon. Bitcoin peaked at $64,829.14 on April 16. Musk's current take on Bitcoin is a sharp reversal from his months of hyping cryptocurrency all over media. Most recently, he's promoted another popular meme-inspired digital currency, Dogecoin, asking Tesla owners in a tweet if they would like "Tesla to accept Doge." Bitcoin Stocks Bitcoin stocks like Coinbase, Marathon Digital Holdings (MARA) and Riot Blockchain (RIOT) were also hammered on the stock market today, as Musk publicly debates cryptocurrencies. Coinbase, the largest U.S. cryptocurrency exchange, gapped down more than 7% in early trading to a fresh all-time low. COIN stock was off 6.8% to 240.84 in afternoon action. Coinbase stock hit a record 429.54 within the first minutes of coming public on April 14. Bitcoin miner Marathon Digital plunged more than 10%, heading toward its 200-day line. MARA stock is down nearly 10%. Marathon Digital is off more than 60% from its intraday high of 57.75 on April 6. The company has a top-notch RS Rating of 99, while its EPS Rating is 57. RIOT shares tumbled 11% Monday. Riot Blockchain stock has lost nearly two-thirds of its value since it hit a high of 61.15 intraday on April 15. The company also has an RS Rating of 99 and an EPS Rating of 57. Tesla Stock Meanwhile, Tesla stock fell 3.9% Monday, back below its 200-day line. TSLA stock briefly reclaimed its falling 50-day moving average on April 30, but since then has sold off hard, according to MarketSmith chart analysis. Since hitting an all-time high of 900.40, achieved intraday on Jan. 25, Tesla stock has lost more than 30%. The relative strength line is trending lower, at its lowest levels since late November. Its RS Rating is 90, while its EPS Rating is 74. Tesla Berlin Delays Musk arrived in Berlin on Monday, presumably to visit Tesla's factory in the area. Jorg Steinbach, Brandenburg's economics minister, confirmed Musk's visit. Steinbach tweeted that the purpose of the visit is mainly technical in character and political meetings have not been scheduled. Musk said he hopes the Berlin plant could start operating by year-end, a shift from Tesla statements in late April that it was on track to do so. Recent reports said the European facility reportedly won't open until early 2022 vs. initial plans for a July 2021 open. Musk blamed German bureaucracy for construction delays. Some of those regulatory delays stemmed from the EV maker not paying minor bills to government agencies or engaging in construction work without the proper permits. MY COMMENT I dont own Bitcoin other than a few hundred dollars......for disclosure. CRYPTO is a very young investment vehicle and very subject to rumor and negative reporting. Most people investing in CRYPTO understand the nature of that market....or should. Same with TSLA....a very young company. Nothing is straight up all the time. There will be time periods of weakness in EVERY investment. The action the past few days......is not....the end of the world. Growing pains and the nature of a volatile investment vehicle......not a crisis.
the only difference between the 2 of course is that one is a business LEADER with an actual product that is favored by MANY And the other one is just a VOLATILE NOTHING In other news, today’s favorite ice cream flavor is cherry vanilla
Cherry vanilla... mmmmmmmm.... Tesla is getting interesting, again. Negative news. Questions about Chinese demand. The end of year Giga Berlin production goal is no surprise to anyone who were following the Tesla thread six months ago. Reasons are documented there. I'm pretty confident they will make vehicles in Berlin this year and we can see they are welding up bodies in a way that suggests GA calibration is well underway. In fact, I suspect it is nearly or fully complete. There are several other holdups, though. Meanwhile, in China, a blog that has been fabricating stories about Tesla brake failures has printed a retraction and issued an apology. Other media outlets were parroting these fantasy articles, just like we do in North America. The difference being, a couple of pipe-hitting, dim sum chefs strolled over to the person spewing the lies with a pair of pliers and persuaded him to stop. Over here, we let them lie all they want and trade the swings.
I was convinced it was going to be another blue Monday , or RED MONDAY, But looks like we had an afternoon rally , split 50/50 red and green Back to the TAXES !! ARGH !!
I am like Bob Geldon in that I like Mondays. The silicon chip inside my head gets switched to power saving.
I did my taxes on feb 15 this year as usual... call me weird but I always look forward to it... I have all our businesses income and expenses written daily on an excel spread sheet, never miss a day... rain or shine, vacation or sick time... it’s always there and I’m adding and subtracting. Then come tax time it’s all easily added to Turbotax. No accountant needed. In fact, I hate accountants, I’ve used a few in the past but they always end up mixing things up and I end up doing more work explaining to them things than doing it on my own. My wife tells me I need to start a side hussle and do it for others. No thank you.
Oh today? I’m down .33, amazing how my added positions of delta, united & bain have balanced everything out so neatly for me. Still holding a majority of tech including tsla.... Life is good, we’re out pickleballing, just found out that Westerville has been upgraded to #17 best cities to live in America on Areavibes (out of 35,000 cities) https://www.areavibes.com/best-places/america/
WOW.....pretty good day for a negative day. Slightly in the red today.....and.....beat the SP500 by .14%. Should give us a good shot at a positive day tomorrow. TESLA had a nice come-back as the day went on.....so did bitcoin.....so.....a good end to the day all things considered.
HAPPY TAX DAY. I sent mine in in April....even though I owed about $1000. I wanted to get in line for the $1400 per person stimulus money.......$2400 for the two of us. I did not qualify under my last years tax return but do under this one. Unfortunately I am STILL waiting for the checks. Oh well....if I dont ever get them I will claim it as a credit on next years taxes.
I like the conclusion of this little article....seems about right to me. Is Stagflation Back? https://www.schwab.com/resource-center/insights/content/is-stagflation-back?cmp=em-QYC (BOLD is my opinion OR what I consider important content) "The constraint on global growth this year has evolved from the supply of vaccines to the supply of nearly everything else. Raw materials, intermediate goods including semiconductors, and even labor seem to be in short supply. This environment risks a stall in output, earnings and job growth while pushing prices higher. Commodity prices are soaring at a pace not seen since the Carter administration. Welcome back, Carter Source: Charles Schwab, Bloomberg data as of 5/5/2021. Although it’s an important new risk to the current economy and markets, stagflation—a term applied to the high inflation/low growth economic environment of the 1970s—is not our base case, thanks to the rise of several offsetting factors. Manufacturing’s stall Manufacturing has been the primary driver of the global economic and earnings rebound over the past year. But now, a stall in manufacturing momentum is becoming obvious. The stall in Europe’s manufacturing PMI (from 62.5 in March to 62.9 in April) and the drop back in the U.S. ISM Manufacturing Index (to 60.7 in April from 64.7 in the prior month) and China’s official manufacturing PMI (from 51.9 to 51.1 during the same period), appear to reflect widespread supply constraints rather than slowing demand. This is evidenced by new and backlogged orders rising along with input and output prices. Looking beyond surveys for evidence, output from Europe’s factories appears to have stalled. By November 2020, industrial production had recovered to 98.9% of its pre-recession level (February 2020), rebounding from its low of 70.6% in April. As of February 2021, industrial production slid to 98.5%, as you can see in the chart below. Specifically, the semiconductor shortage has continued to hurt the European car industry with monthly production falling -16% between November 2020 and March 2021. Europe’s biggest auto producer, Germany, has seen its entire economy contract -1.7% in the first quarter from the end of last year. Industrial production stalls in 2021 Indexed to 100% on February 2020. An indexed number is a figure reflecting price or quantity compared with a base value. The base value always has an index number of 100. The indexed number is then expressed as 100 times the ratio to the base value. Source: Charles Schwab, Bloomberg data as of 5/7/2021. Widespread shortages A broadening mix of input shortages, not just semiconductors, is alluded to in the latest European Commission survey of industrial businesses. Businesses responding to input shortages by curbing production rose to an all-time high of 21.7% in April. 45% of companies in Germany reported bottlenecks in intermediate products. Last week’s April U.S. ISM manufacturing report echoes trends seen in Europe but offers more detail, clarifying just how broad the shortages in the global supply of key commodities and intermediate inputs has become. Shortages were reported in widely followed inputs like lumber and semiconductors but also in boxes and plastic, used to make or package nearly everything. Containerboard—used to make cardboard boxes—at record low weeks of supply Data represents the industry total for weeks of inventory based on shipments of corrugated products in millions of square feet, as reported in the Fibre Box Association Statistical Bulletin. Source: Charles Schwab, Bloomberg data as of 5/7/2021. Supply shortages are affecting almost every industry, leading companies in many sectors to report difficulties finding workers to fill open positions. This may have contributed to Friday’s much weaker-than-expected April job reports in the U.S. and Canada. Manufacturers around the world are seeing strong orders on improved demand, but inventories near all-time lows and very tight supplies of many inputs from semiconductors to workers may increasingly act as a constraint on output. At the same time, higher prices on a broadening number of inputs may flow through and push consumer prices higher. Stagflation offsets The forces of stagflation may be offset by prompting central banks to continue stimulus, lawmakers to rollout additional fiscal stimulus in the U.S. and Europe, business leaders to invest in a wave of capital spending, accompanied by a sharp rebound in output by the service sector. Central bank stimulus - In the 1970s, central banks reacted to slowing output and rising prices with tighter monetary policy. Today’s response sharply contrasts this historical approach. The Fed and European Central Bank (ECB) continue to insist that the ongoing rise in inflation will be “largely transient” and intend to be very slow to tighten policy. Fiscal stimulus – President Biden’s plans for yet another huge U.S. stimulus program and Europe’s massive rescue spending rolling out this summer may further feed demand, rather than lift supply. Besides being inflationary, these programs may also support business, consumer, and investor confidence through any soft patch in output or jobs. Capital spending - Supply constraints may compel more capital investment by businesses. For example, Intel announced in March the opening of a foundry in Arizona to provide US/European capacity to semiconductor production (75% is currently manufactured in Asia). According to the European Commission’s bi-annual investment survey, carried out in March/April this year, real investment in the manufacturing industry is expected to increase by 5% in the European Union in 2021, up from the 0% reported in the prior survey dated October/November 2020. Services rebound – The EU’s services sector may snap back on re-openings in the coming months. The Global Service PMI rose above manufacturing in April for the first time since August, by the widest amount since before the pandemic, reflecting the rebound already seen in the United States. In Europe, the service sector is lagging the recovery at a reading of 50.5 in April, versus a reading of 62.9 for manufacturing. Because this year’s virus restrictions in Europe focused on services rather than the manufacturing sector, the economic re-opening should help the larger service portion of the European economy offset any weakness in manufacturing. While the current environment does have some resemblance to the 1970s, the differences are likely powerful enough to keep investors focused on the positives of reflation, defined by solid growth accompanying inflation, rather than the negatives of stagflation. MY COMMENT I dont see STAGFLATION unless we end up in a NASTY wage/price spiral situation. thanks to the deflationary environment that we have seen....world side....for the past 10+ years.....we have a good amount of room for inflation to happen before it has negative impact. personally.....I have NO FEAR of inflation going as high as 3-4%.
At the moment after selling out of TESLA and SNOWFLAKE I am down to 10 stock positions. I AM NOT looking to add more. I like to stay between 10 and 15 stock positions. At the moment I am going to just stick with the 10 that I have. I feel like I have a good balance between the tech side of things and the goods producing companies like NKE, PG, HON, and the retail companies like HD and COST. I own the top four companies in the SP500....APPL, MSFT, AMZN and GOOG. I also own three more companies in the top 30 of the SP500......NVDA, PG, and HD. In the top 50 of the SP500 I own.....NKE, COST, and HON. That is my 10 holdings. NOW.....that is a BIG CAP portfolio. In addition I double and triple up on these holdings in my SP500 Index fund and my Fidelity Contra fund. That is intentional and what I like....a very concentrated portfolio on the stock side of things. ALL of these companies have HUGE international business exposure around the world. I like the margin of......SAFETY....that these sorts of ICONIC companies give me. At this point in my life and with the assets that I have.......I am content to sit and compound money....I dont care to swing for the fences......or gamble.
