Notes From All Over -- July 26, 2021

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

Inflation: a key gauge of future inflation is easing. Link to The WSJ.

• after soaring since October, 2020, public and bond-market expectations of inflation have fallen back, suggesting sustained higher prices are less likely;
• see commentary, July 24, 2021;
• see short note at bottom of this post, July 22, 2021;
• commentary, July 19, 2021;
• post, July 13, 2021;
• what causes inflation? Jay Powell, August 29, 2021.

Bidinflation: Breitbart --

Might as well break it to the kids now. Christmas may look a bit austere this year. Hasbro—the maker of Monopoly, Nerf, and Dungeons & Dragons—announced that it is implementing price increases that will "go into effect fully for the fourth quarter" in order to maintain profit margins in the face of skyrocketing costs. This was music to the ears of investors, sending the stock up better than 12 percent Monday. But whatever tune those investors were singing, it certainly wasn't a Christmas carol — because the fourth quarter price hikes will come in what is known to the rest of us as the Christmas season.

We do not mean to cast aspersions on Hasbro or its investors. As the toy maker's CEO pointed out in an interview with CNBC, ocean freight is on average four times as expensive as it was a year ago. They aren't waging a war on Christmas here. It's just that inflation is here, and it does not look like it is going anywhere. Shoppers are likely going to find that things are a lot more expensive come Christmas time.

As Greenlight Capital's David Einhorn detailed in a letter to investors sent out Monday, much of the capital investment made over the past decade has gone into digital media, unprofitable tech companies, and companies that profess the woke capital catechism trinity of environmental/equity, social, and governance. That has left the kind of companies that make the things that are rising in price starved of investment and unable to expand production to meet demand. Investors in Tesla—up 113 percent over the past 12-months—are no doubt happy, but nothing Tesla does is going to resolve the shortage of cars and trucks that has sent used auto prices up 10.5 percent in June and more than 45 percent since last year.

"The point is, we believe we have reached a structural change in inflation," Einhorn wrote. "Part of that is driven by public policy, but part of it has been driven by capital markets and ESG mandates.The enormous emphasis on investing in often money-losing businesses in disruptive areas like technology has left traditional industries starved for growth capital. The result is they haven’t grown capacity and now they cannot meet demand. The more these ‘value' stocks are starved of capital, the higher prices are likely to go and the longer the inflation is likely to last."

All the talk about inflation being "transitory" may actually be making things worse. Higher prices would ordinarily lure investment. But with Fed officials and the Biden administration insisting that prices will not keep rising—recall that Biden recently claimed that his $4.1 trillion spending package would reduce inflation—investors are likely deterred, according to Einhorn. That would explain, for example, why new home sales remain surprisingly low despite record high prices. Who wants to invest in building new homes—or in a home builder—if the Fed is promising to crush the price gains? Ironically, that underinvestment will likely mean supply constraints remain in place and prices do keep rising.

– Alex Marlow & John Carney

Breitbart News Network

Whether or not one agrees with Marlow & Carney, it's hard to blame Hasbro's price increases on President Biden.

************************************
Give It A Rest

US set to push global economy over recovery line: see The WSJ. 

• US 2Q21 likely exceeded pre-pandemic GDP, if so, a landmark moment for the global recovery is likely:
• again, the incumbent has bragging rights
• from the linked article:

The U.S. economy likely returned to its late-2019 size during the three months through June, helping to lift global output above its pre-pandemic level for the first time.

Economists surveyed by The Wall Street Journal estimate that figures to be released Thursday will show that the U.S. gross domestic product rose at an 8.5% seasonally adjusted annual rate in the second quarter. That likely left U.S. GDP—the value of all goods and services produced across the economy, adjusted for seasonality and inflation—above the $19.2 trillion level reached in the final quarter of 2019, the last before the spread of Covid-19 pushed large parts of the global economy to shut down and contract, they say.

The combined economic output of the Group of 20 leading economies exceeded its pre-pandemic level in the first quarter,  according to estimates by the Organization for Economic Cooperation and Development. With the U.S. and a number of other large economies crossing that threshold in the second quarter, it is likely that global output is now higher than the level recorded in the final quarter before the coronavirus struck, the group says.

It will be interesting to see what Rick Santelli, CNBC, has to say if US GDP comes in at 8.5% for the 2Q21. I believe this will be the "first reading" as they say. If traveling, I may miss Santelli's comments.

One assumes the market has already "baked in" this 8.5% 2Q21 US GDP. Prediction: come Thursday, the Dow will go up, go down, remain unchanged.

Meanwhile, for the rest of the year, from Goldman Sachs:

Goldman Sachs trimmed its U.S. economic growth forecast for remainder of the year on Monday, citing a slower recovery in the services sector.

The Wall Street bank revised both Q3 and Q4 growth 1 percentage point lower, to 8.5% and 5.0% respectively. That left the 2021 growth forecast at 6.6% on a full-year basis.

"We have long expected growth to peak in a mid-year boom fueled by vaccination and fiscal support," Jan Hatzius said on a note to clients. "But the subsequent deceleration now looks likely to be a bit sharper because the goods-to-services rotation is likely to be less seamless."

Weren't we trying to get to 6% under a previous administration?

US equities: apparently major indices hit new records today. 

Roku: link here.

"They" say AAPL is expensive at 34x earnings. We will see tomorrow. If AAPL misses, shares will plummet. Think SAM from last week. 

TSLA, link here. Profits "soar" to record -- The WSJ.

• sales and profit exceeded estimates:
• record-setting deliveries for the June, 2021, quarter;
• shares gained a paltry 2.5% after-hours:
• revenue: $11.96 billion vs $11.3 billion; and $6.04 billion y/y (comparisons with 2020 irrelevant)
• adjusted earnings: $1.45 vs 97 cents and 44 cents y/y/ (ditto)
• record-setting deliveries: 201,250 vehicles

Intel (INTC) set plans go again become world's premier chip company: easier said than done. Link here. Apple, Inc., has huge lead. Huge. 

McKesson: increases quarterly dividend from 42 cents to 47 cents. Let's see, 5 / 42 = 12%. That seems a nice offset to "inflation." Again, the gap widens between the investor class and the non-investor class. 

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

SCCO: this one is very, very interested; previously posted; increases quarterly dividend from 70  cents  to 90 cents.

Each quarter for the past few quarters SCCO has been increasing its dividend. Starting on 5/12/20: 20 cents; 40 cents; 50 cents; 60 cents; 70 cents; and now 90 cents. From 20 cents to 90 cents has more than quadrupled in one year; let's see, --- this most recent increase, 20/70 = almost 30% increase. 

Again, ... well I don't need to repeat myself. Trading at $65; a P/E of 24; a dividend yield of 4.44% prior to this most recent dividend announcement. Record date: Auugst 12, 2021; pay date; August 26, 2021.

Automobile manufacturers: in deep doo-doo. Link here. 

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

Vaccine rollout, CDC data, Monday, July 26, 2021, link here:

• delivered: 394,949,575
• administered: 342,212, 051
• at least one dose: 188,729, 282
• fully vaccinated: 163,173,366

Covid-19:

• will widen the gap among the West, the "East", the emerging markets, and the failing countries:
• the gap might be most noticeable in the West, between the US and the EU;
• free-market capitalism, entrepreneurial spirit, makes a huge difference
  

US to end combat operations in Iraq by year-end. -- President Biden.

• if he pulls this off, he will go down in history as ending the last American wars; 
• Trump was going down that road but never pulled it off;
• good, bad, indifferent, that's how the history books will report it; "Biden ends last American wars." 

Semi-pro football: apparently Texas and Oklahoma leave the Big 12; join the SEC.

Russia banned from the Olympics over doping violations: Russian gymnasts take gold.