Week Ending July 23rd, 2021
CPI had its largest one-month increase… Not since 2008 have we seen such an increase.
What does it mean to you – Inflation may not be transitory. It was only a couple of months ago that the Fed said inflation was transitory. Year over year total CPI is up 5.4% and most likely will continue its upward momentum as policymakers in Washington D.C. continue to throw money at COVID. Currently, there is over $1 trillion of unspent funds, and they just allocated more.
Factory orders up 1.7%… Durable goods up 2.3%.
What does it mean – As manufacturing works through the supply chain disruptions, massive drawdown of inventory, bad policy, and a new trade war with China, factories are continuing to ramp up to meet demand as the economy is opening.
Trade war with China… What? I did not hear that on the news.
What does it mean – Why is there a chip shortage? Why does it take forever to get parts for a refrigerator, your car, or anything you want made in China?
The SEC is continuing to take a stricter view on listing Chinees companies on the public markets. A perfect example of why we need to block China is Didi. Much like Uber, Didi is a ride-sharing app. On June 30th, Didi raised $4.4 billion in the U.S. markets of mostly American money. Two days later, Chinese regulators dropped the hammer on Didi citing concerns of privacy on the app. Didi stock plummeted and China keeps the money while U.S. shareholders are left out in the cold.
Didi is not the only Chinese company to have experienced this. We have seen Alibaba, the Chinese equivalent of Amazon, hit with Chinese government regulations that come out of left field all to grab money to prop up their communist regime at the expense of American investors.
The real issue is there is no reciprocity. Meaning, China wants to list their companies in the U.S., wants access to our capital, our technology, and wants waivers for their domestic companies.
Yet, they give nothing and only take. In China, there is no free trade, they extort American businesses and steal technology, and give little to no access to their financial markets. It is a no-win situation for American companies and American Workers.
Of lately, companies like Nike, Disney, Apple, Microsoft, and many more fear losing access to China far more than being confronted by moral outrage by U.S. citizens. How can you blame them, many U.S. citizens do not even know it is happening, as much of the media is held silent by Chinese ownership of our media companies.
May nonfarm payrolls… Revised up from 559,000 to 583,000.
What does it mean – June numbers have also fallen short of the Feds goal. Yet, there are over 9.8 million job openings.
I hate to continue to harp on this, but until “we the people” get fed up with the policymakers, the policy will not change. Businesses are in competition for employees with the federal government. Why work when you can get a check to stay home.
Inflation… Powell admits inflation is higher and may last longer than expected.
What does it mean – The IMF now agrees with all of us who said that this is not transitory. Folks, the new (MMT) Modern Monetary Theory is a honey trap for lazy bureaucrats who refuse to be fiscally responsible. This is socialism renamed. Be careful. They can’t print their way out of this.
FED has a mandate… According to the most recent FED report, the FED has to continue to buy RMBS (Residential Mortgage-Backed Securities). They now believe it is their responsibility. That by doing this through printing billions more, they will make housing more affordable by keeping mortgage rates low.
The only problem is that all-time low-interest rates are not the issue. It is a bad policy by this administration and Congress. These policies of allowing China to run amuck, destroying our energy independence, wreaking havoc on our mining and timber industries are the issue. It is punishing low- and middle-income Americans causing massive inflation and driving up the costs of building, shopping for groceries, and transportation.
Policy matters and we got more than we need. The more regulations you mandate, the more it costs businesses to comply with those regulations, and the more it expands government, is a hidden tax on business, and stifles entrepreneurism.
Always at your service,
Doug De Groote, CFP®, MBA, CTC Managing Director