Joe Biden has been telling everyone how great the U.S. economy is.
Of course, NPR is there supporting his argument and claiming that Biden is not getting the credit he deserves on the economy.
I wonder why Biden is struggling to get credit on the economy?
Real worker earnings have fallen further than at any time in the last 40 years as inflation erodes wage gains.
That is what an 8.5% inflation rate will do.
At some point the CPI number will come down. That doesn't mean current prices are going to go down.
If gas prices are the same next year that would be a 0% increase in the CPI index. Keep in mind the CPI is only measuring price changes over the last year. The base the CPI is being measured against is getting larger every month for the inflation that started just over a year ago.
I would expect we will see at least another couple of months of the CPI in the 7%-8% range.
For example, the Producer Price Index (the prices that producers pay for products before they reach consumers) increased 11.2% for the year ended March 31. That indicates that more prices increases are going to be passed on.
Compare that to Germany where the PPI for March was 31% while CPI was 7.3%.
U.S. investors in stocks and bonds are in a worse position than wage earners.
Stock and bond prices are down in actual terms before you even consider inflation losses.
The first quarter was one of the worst in 40 years for stock and bond investors.
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| Source: https://www.bloomberg.com/news/articles/2022-03-31/losing-5-was-best-you-could-do-in-stocks-and-bonds-this-quarter |
Across equity and fixed-income markets broadly, the least-bad performance among U.S. assets were declines of 4.9% in the S&P 500 and speculative credit. They were followed by a 5.6% fall in Treasuries and a 7.8% slide in investment grade. Not since 1980 has the best return among those four categories been so paltry, data compiled by Bloomberg show.
Numerous periods have obviously been far worse for specific sectors. This quarter’s retreat in equities pales in comparison to the 20% drubbing they took at the start of 2020. But viewed as a whole -- and leaving out commodities, which soared -- the new year has been a futile one for an investor seeking shelter from the global storm.
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| Source: https://www.bloomberg.com/news/articles/2022-03-31/losing-5-was-best-you-could-do-in-stocks-and-bonds-this-quarter |
The last time we have seen anything that is remotely close to what has happened this year to bond prices is...NEVER.
For example, if someone bought a U.S. 30-year treasury note in May, 2020 they would have now lost 34% of their investment. That loss does not include the loss in spending power due to inflation either.
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| Source: https://twitter.com/zerohedge/status/1518258115652820993 |
It will take a long, long time to make up for that loss in value.
This will have devastating effects, in particular, on the investment portfolios of insurance companies and pension funds which typically buy long-term bonds for stability.
There is nothing stable about this.
What about stocks?
One investment analyst I follow suggests that 2022 is a year to invest in stocks of companies that produce things that people NEED to live and to divest of companies that provide things people DON'T NEED to live.
First and foremost, you need food and energy to live.
On the other hand, you don't need Netflix to live.
Compare the stock charts of ExxonMobil and Netflix over the last year.
Most particularly, look at the divergence since January 1, 2022 in those two companies.
You also don't need the Walt Disney Company to live.
Some investors may have also decided that the best business strategy for what is supposed to be a family-based entertainment company might not be to go "all in" supporting an LBGT+ agenda focused on small children.
The stock has lost over $70 billion in value since January 1.
People have also apparently decided that they did not need CNN+ to live.
CNN rolled out a premium "news" streaming subscription service on March 29.
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| Source: https://www.usatoday.com/story/entertainment/tv/2022/04/21/cnn-plus-streaming-service-shutdown-after-three-weeks/7396773001/ |
CNN+ will cease to exist on April 30--a month after it began.
Reports are that CNN has already invested more than $300 million in the venture and it would require $1 billion in total to meet its revenue goals.
The big question I have is how CNN executives could look at cable tv ratings and believe that there were that many people who would pay for a CNN+ in the first place?
For example, here are the most recent cable news ratings.
Is it any surprise that CNN+ was having trouble getting subscribers even at a discounted $2.99/month price?
Mark CNN+ down with the Edsel and New Coke as one the bigger product flops of all time.
Biden is not getting the "credit" he deserves?
I would suggest that most Americans disagree.
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| Source: https://tippinsights.com/i-i-tipp-poll-are-you-better-off-today-than-a-year-ago-by-4-to-1-americans-say-no/ |
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