Thursday, May 13, 2021

➡️ Inflation Is Here, But Is It Here to Stay?

Good morning. The latest consumer price index (CPI) numbers were expected to be high. But with..
It's the monthly jobs numbers today and they're not going to be pretty and will be possibly the tip of the iceberg as we head into May.

Good morning. The latest consumer price index (CPI) numbers were expected to be high. But with prices now rising at an annualized rate of over 4.2 percent per year, the highest since 1981 (when you could park money in Treasuries at 20 percent) it's clear that inflation is running hotter than even the Federal Reserve is looking for.

Higher inflation means prices are rising higher, which sounds like it should be good for stocks. For companies that can pass on higher costs to customers, things should be fine. But many companies can't. And rising prices of commodities this year are leading to far higher prices than what's going into final consumer prices. There isn't enough data yet to determine if this is final or not, hence the stock market's reaction to this unexpectedly high level.

Now here's the rest of the news:

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MARKETS
DOW 33,587.40 -1.99%
S&P 4,062.93 -2.15%
NASDAQ 13,031.68 -2.67%
*As of market close
Stocks closed lower on Wednesday, with all major indices sharply lower.
Oil rose 0.7 percent, closing at $65.76 per barrel.
Gold dropped 0.8 percent, closing at $1,821 per ounce.
Cryptocurrencies trended lower, with Bitcoin last at $54,470.

Today's TOP TIPS
Long-Term Trends Bode Well for This Latest Tech
The rise of electric vehicles over the past few years has proven strong even with a global pandemic. Companies have sprouted up over the past year to take advantage of the trend.

Any company that can offer a significant innovation is capable of grabbing a big market share for itself. But it also has to be able to scale up that technology to commercially-viable levels.

» FULL STORY

Insider Trading Report: Activision Blizzard (ATVI)
Peter Nolan, a director at Activision Blizzard (ATVI), recently bought 20,000 more shares. The buy increased his holdings by nearly 12 percent, and came to a total purchase price of $1.9 million.

This marks the first insider buy of 2021. Insiders tend to be sellers of shares, at the C-suite level, suggesting a large amount of stock options being exercised. However, insiders have been known to buy on dips, including large insider buys last year at the start of the pandemic.

» FULL STORY

Unusual Options Activity: Vornado Realty Trust (VNO)
Shares of office real estate investment trust Vornado Realty Trust (VNO) are down over 50 percent from their peak price in 2015. While recovering from last year's work-from-home trends, one trader sees a decline in shares in the coming months.

That's based on the September $40 puts. With 127 days until expiration, over 10,535 contracts traded against a prior open interest of 175, for a 60-fold rise in volume.

» FULL STORY

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Used Vehicles Drive Inflation Rates Higher

The 4.2 percent annualized jump in consumer price s was led in part by a 10 percent rise in used cars. The past few months have seen a shortage thanks to lower production of new cars due to a semiconductor shortage. Demand for cars has also risen during the pandemic as the population has shifted out of cities.
EU Scraps $300 Million Amazon Tax Bill

The second-highest court in the European Union scrapped a proposed $300 million tax bill aimed against Amazon (AMZN). The European Commission struck down a tax bill proposed by Luxembourg, which was created in an attempt to get around the tax breaks that multinational firms have been able to take advantage of in the EU.
Chick-fil-A Faces Sauce Shortage

Chicken sandwich chain Chick-fil-A is the latest to report a supply chain shortage. The company's dipping sauces are the latest item in short supply. To address the issue, customers are limited to one sauce cup per item ordered. The chain has also had to contend with a labor shortage supply in the past few months.
Household Debt Climbs in First Quarter

Household debt rose 0.6 percent in the first quarter, to $14.64 trillion. The reason for the rise has come from higher mortgage balances, possibly as a result of refinancing and the purchase of higher-priced homes. In one bright spot, however, credit card balances declined by $49 billion in the first quarter.
Secondhand Clothing Startup Hits $4.5 Billion Valuation

Vinted, a secondhand clothing marketplace, has recently raised $303 million at a $4.5 billion valuation. The European-based startup reports 45 million customers. All funds were raised from previous backers of the company at lower valuations. The firm was first valued as a unicorn at the end of 2019.

S&P 500 MOVERS
TOP
NLOK 7.195%
VTRS 3.831%
PRGO 3.203%
VLO 2.935%
SLB 2.687%
BOTTOM
TRP 9.439%
PENN 8.413%
CZR 8.296%
GPS 8.019%
MAC 7.85%

Quote of the Day
I'd like to get out of the pandemic more solidly than we are today. So, I'd like to see those metrics, fatalities per day and confirmed cases, go even lower than where they are. I'd like the CDC to come out and tell us they're more comfortable than they have been…So, we'll see if we can get to that point, but I don't think you really want to change policy while you're still in the pandemic tunnel. Even though you can sort of see the end of the tunnel, we're not there yet, and we've got to push hard till we get all the way to the end.
- James Bullard, President of the St. Louis Federal Reserve, on the metrics he's watching before the Fed will be in a position to ease off economic support.

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