Oh, the boogey man is out tonight... 
1/n
There will be a narrative that will soon be prolific, that focuses on the dual tailwinds for technology companies of reinflation and the end of COVID.
Reinflation refers to price increases in a basket of goods and services due to the vast amount of pent up demand ...
There will be a narrative that will soon be prolific, that focuses on the dual tailwinds for technology companies of reinflation and the end of COVID.
Reinflation refers to price increases in a basket of goods and services due to the vast amount of pent up demand ...
2/n
...for those goods and services that were unavailable to the populace during COVID times.
This ranges from travel, to hospitality and impacts commodities (like oil) and possibly wages as lost jobs return.
...for those goods and services that were unavailable to the populace during COVID times.
This ranges from travel, to hospitality and impacts commodities (like oil) and possibly wages as lost jobs return.
3/n
The narrative will read cautiously based on what we hope will be a nearly once in a lifetime spike (or recovery) in the cost of certain items.
This reinflation should be a one-time event, let’s call it a few quarters, and then subside to normalcy.
The narrative will read cautiously based on what we hope will be a nearly once in a lifetime spike (or recovery) in the cost of certain items.
This reinflation should be a one-time event, let’s call it a few quarters, and then subside to normalcy.
4/n
But, the fear will be that the accommodative fiscal and monetary policy that was adopted to stave off mass depression and save lives was in fact too aggressive.
We will be told that an efficacious vaccine and a return to some semblance of normalcy is bad.
We will be told..
But, the fear will be that the accommodative fiscal and monetary policy that was adopted to stave off mass depression and save lives was in fact too aggressive.
We will be told that an efficacious vaccine and a return to some semblance of normalcy is bad.
We will be told..
5/n
... that a return to job growth is bad.
All of this will fall under the purview of “inflation fears will dominate the market narrative for several months.”
Hey, we even got fresh data to support the inflation fears just this morning.
U.S. retail sales for January were...
... that a return to job growth is bad.
All of this will fall under the purview of “inflation fears will dominate the market narrative for several months.”
Hey, we even got fresh data to support the inflation fears just this morning.
U.S. retail sales for January were...
6/n
massively better than expected and a dramatic recovery from December.
* Retail sales in total were up 5.3% month over month (MoM) versus estimates of 1.1% and up from -1% (negative) in December.
massively better than expected and a dramatic recovery from December.
* Retail sales in total were up 5.3% month over month (MoM) versus estimates of 1.1% and up from -1% (negative) in December.
7/n
* Retails sales ex-auto & gas were up 6.1% versus estimates of 0.8% and up from -2.5% in December.
So, why am I writing about retail sales in a market moving earnings report?
I do so because ...
* Retails sales ex-auto & gas were up 6.1% versus estimates of 0.8% and up from -2.5% in December.
So, why am I writing about retail sales in a market moving earnings report?
I do so because ...
8/n
...soon enough none of earnings will matter, which is to say, the doom and gloom prospects of inflation colliding with the “not stay at home” narrative could hit tech stocks indiscriminately.
But, what are we so fearful of?
...
...soon enough none of earnings will matter, which is to say, the doom and gloom prospects of inflation colliding with the “not stay at home” narrative could hit tech stocks indiscriminately.
But, what are we so fearful of?
...
9/n
...
* A reinflation due to a ‘V’ shaped recovery is good news, right?
* An efficacious vaccine is good news, isn’t it?
* An end to COVID is good news — even required news.
If this is bad news then what’s the alternative?
...
...
* A reinflation due to a ‘V’ shaped recovery is good news, right?
* An efficacious vaccine is good news, isn’t it?
* An end to COVID is good news — even required news.
If this is bad news then what’s the alternative?
...
10/n
* A never ending COVID pandemic?
* A dead economy irrespective of fiscal and monetary policy?
Certainly, all will be on the look out to see if the reinflation is temporary, but for now we must hope for it because...
* A never ending COVID pandemic?
* A dead economy irrespective of fiscal and monetary policy?
Certainly, all will be on the look out to see if the reinflation is temporary, but for now we must hope for it because...
11/n
... without it we are stuck in a limited world, this world, where a health pandemic dominates everything.
We have evidence that the booms and busts in retail sales are entirely COVID driven and likely to find equilibrium:
....
... without it we are stuck in a limited world, this world, where a health pandemic dominates everything.
We have evidence that the booms and busts in retail sales are entirely COVID driven and likely to find equilibrium:
....
12/n
We can talk about earnings results, but the next year will be about the elephant in the room — and financial media will make sure that elephant has a magnifying glass on it — because elephants on their own aren’t big enough.
We can talk about earnings results, but the next year will be about the elephant in the room — and financial media will make sure that elephant has a magnifying glass on it — because elephants on their own aren’t big enough.
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