Payne's Perspective: September 27, 2021: Brace for D.C. Follies
I'll give you all I've got to give
If you say you love me too
I may not have a lot to give
But what I've got I'll give to you
I don't care too much for money
For money can't buy me love
Can’t Buy Me Love
The Beatles’ hit song was a message told by poets and philosophers since the beginning of time – that there’s more to life than money. But those same poets and philosophers shared a trait as everyone else-they needed money to live. On that note, we all want our money to stretch as far as possible, but that’s becoming a serious challenge these days.
During the week, Nike (NKE) and FedEx (FDX) paid the price for the impact of inflation and the constrained supply chain. In addition, Costco (COST) alerted the public (stuff like toilet paper will be limited in quantities per customer). Costco’s management has a good handle on consumer psychology and buying patterns, so this is very telling.
Households feeling the brunt of higher prices and sensing they are going higher are already beginning to hoard. There will come a point, however, when consumers will put off buying nonessentials and brand name Consumer Staples (XLP). Still, before that, we could see a decline in demand for Consumer Discretionary (XLY) products.
Costco Pricing Pressure:
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