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Monday, October 25, 2021
I don't like Jack Dorsey's Jim "The Anvil" Neidhart-like beard (although I was a big Anvil fan as a kid in the '80s). It's unbecoming for a now 44-year-old tech billionaire who knows a lot about all of us through his creations of Twitter and Square.
But I tell you what I do like from the reclusive Twitter and Square CEO: his dire new warning on hyperinflation.
I think Dorsey is on the mark here, though it's partly self-serving as any outbreak of hyperinflation would meaningfully erode the value of the U.S. dollar and probably be bullish for crypto (which Dorsey is heavily involved in personally and via Square's Cash App).
But the reality is that hyperinflation — or an extreme rise in prices in a short period of time — is beginning to happen right now. It may not be showing up yet in the government's CPI or PPI reports, but it lurks around the bend. For instance, we are one bad snowstorm away from oil prices going north of $100 a barrel and natural gas prices going even further through the roof, experts have told me. Blame the pandemic and a lack of investment in the space, these pros say.
Hyperinflation is going to change everything. It’s happening.
— jack⚡️ (@jack) October 23, 2021
Meanwhile, Tide maker P&G is looking at a third round of price increases for this year due to rising prices on commodities and transportation. P&G is hardly alone. Appliance king Whirlpool is closing in on a $1 billion financial hit this year from higher commodities prices. It, too, continues to raise prices on consumers. Burrito giant Chipotle is hiking prices to offset labor inflation (but promised me they won't be cutting historically large portion sizes to reduce costs ... thank goodness).
More talk of price increases are coming as a slew of large companies will report earnings this week.
Here are some fresh inflation commentary from top execs to me on Yahoo Finance Live:
"People have different definitions of transitory. I'm not quite sure how long you would define transitory these days. I mean, I think the real question is, do we see expected cyclical inflation or does it turn into a structural inflation? I don't think it's the latter one, personally. But I think with the inflation environment, we will see around us for some time. It's not going to go away overnight and we're prepared to deal with that." — Whirlpool CEO Marc Bitzer
"If we just look at two components of cost, commodities and transportation, our current forecast is that will be a $2.2 billion after tax increase versus a year ago. We saw about a $600 million after tax increase in those costs in the quarter that we just completed. So it is a significant inflationary cycle." — P&G's incoming CEO Jon Moeller
So you are damn right that Federal Reserve Chair Jerome Powell should be warning about increased inflationary pressures as he did on Friday (which spooked the market). Powell lulled everyone into thinking inflation was transitory. He was seriously misguided, and now investors could be left holding the bag.
Maybe the beard-wearing, crypto-loving hyperinflation worrywart Dorsey should be in the mix for Fed chief. I'll ask our Fed correspondent Brian Cheung later on today if Dorsey warrants consideration by the Biden administration.
Having said all of this, if you haven't talked with your financial advisor on how to protect your portfolio against a long period of super high inflation (which is here), make an appointment to do so this week. And say Jack Dorsey and Brian Sozzi inspired the outreach.
Odds and ends
Tech stock to watch: Another avalanche of earnings will barrel down the heads of investors this week. There is the high intrigue around Facebook's earnings, out after the market close today, in the wake of Snap's admission that Apple's iOS privacy changes are causing more harm than anticipated. People on the Street continue to say Facebook's stock is too cheap to ignore. Well, we are about to find out the truth. Then later in the week there are numbers out of Microsoft (growth is beginning to slow, yet oddly the stock continues to trade as if growth isn't slowing), Twitter (hard to believe the company won't echo Snap-like issues in its guidance), Ford (the new stock market darling), Caterpillar (China's economic growth slowdown has me concerned about the equipment maker's outlook), Apple (watch for chip shortage comments and a potential sequential China sales slowdown), and Amazon (stock is only up 2% year-to-date, I wouldn't be surprised to see buyers emerge in what could be a strong holiday shopping season).
But out of all these earnings reports, I think Advanced Micro Devices could be a fun one for active traders. Intel's quarter and outlook last week suggest AMD had another impressive three months of performance. And in turn, that momentum will be factored into the company's outlook. AMD CEO Lisa Su continues to fire on all cylinders. To be fair, the stock has exploded 13% in the past month ahead of earnings. So perfection is expected from AMD this week, and it's likely the chip maker will deliver.
Game time for Yahoo Finance: As Yahoo Finance Editor-in-chief Andy Serwer wrote Saturday, today is our eighth annual All Markets Summit. I have become truly obsessed with this event as it has morphed into a festival of business and finance where top leaders converge to share their latest bold views. If you saw how I prepped for this thing you would think I was a professional athlete trying to claim a championship. Nevertheless, this year I would say the event is also a celebration of resilience. The resilience of global businesses against inflation, the resilience of workers still pounding away at home for 15 hours a day and the resilience of leaders to keep leading effectively in a world that remains supremely volatile. We're right out of the gate with our Brian Cheung interviewing SEC Chair Gary Gensler. I have three interviews on the docket: Target Chairman and CEO Brian Cornell (tis' almost crunch time for Target with the holidays around the bend); American Express Chairman and CEO Stephen Squeri (big quarter out from Amex Friday that pushed the stock to a record); and Intel CEO Pat Gelsinger (yes, the quarter shared last week was challenging as was the company's outlook). The lineup of speakers is amazing. I would pay careful attention to the following:
Andy's interview with Zoom founder Eric Yuan (he doesn't do many interviews). Zoom stock is down 17% year-to-date and the company just scrapped its splashy $15 billion acquisition of Five9
A chat between our senior health care reporter Anjalee Khemlani and Pfizer CEO Albert Bourla (who has been known to move broader markets).
All-in-all a fun day on tap, looking forward to talking with my colleagues in-person.
Yahoo Finance Highlights