Thursday, March 17, 2022
**NOTHING HERE SHOULD BE CONSIDERED INVESTMENT ADVICE!!**
Good morning to all my wingmen and wing-women out there. Here are a few noteworthy and tasty bites worth digesting. Enjoy!
The verdict is in and the suspense is over. The Federal Reserve’s decision came in yesterday and they will be raising interest rates for the first time since 2018. Here’s the basics…..
- Current plan is to raise rates by 0.25% - 0.5%.
- Will keep the additional 6 Fed meetings planned this year “live” (meaning they can raise rates 6 more times this year if they see fit) and currently planning 4 hikes in 2023. That’s 11 (including yesterday) rate hikes on the table!!
- Doesn’t mean they will but provides them with optionality.
- Fed is targeting a 4.1% inflation by the end of this year…..but some argue that is quite optimistic.
Materials are one part of the inflation equation (an important part) but not the only part. Labor markets are also extremely tight now (…..there are 1.7 jobs available for every 1 unemployed person), which leads to companies having to raise compensation to fill needed roles. Those wage pressures play into pricing and overall inflation.
Maintaining price stability, while maintaining a strong labor market is the Fed’s key desire. The goal is a strong AND sustained labor market. The Fed’s argument is you can’t have maximum employment for any sustained period without price stability (…seems reasonable).
You’ll also likely hear financial experts say things like ….“Financial conditions in the market determine monetary policies.”
And you may be asking yourself….WTH does that mean? Simply put, if the economy is in trouble and at risk of falling off the cliff (like during the COVID-19 pandemic) the Fed adjusts monetary policies to keep the economy active and moving along (e.g. lower interest rates). If the economy is overly robust and booming, they adjust monetary policies to bring levels down to more sustainable levels (e.g. higher interest rates). The current situation is obviously tied to the latter.
By implementing the planned rate increases the Fed’s goal is to slow the economy while ensuring the labor market to be strong. The goal is to get inflation back down to more ‘normal’ levels…….where the target is 2% inflation.
Overall, the question is simple….is this good news? And though there will be a lot of different talking heads with opinions out there, how the markets react is really the only important thing that matters. And the S&P 500 and DJIA were both up (+1.5% and +1%) after the news. 🥳
Let’s see if that maintains after there’s more time to interpret all the info.
Kevin Johnson, the current CEO of Starbucks, has officially resigned yesterday after 13 years at the company…..the last 5 years as CEO. This news broke just before Starbucks annual shareholder meeting. Kind of a surprise given he has navigated Starbucks through the lows of the pandemic and brought them out of it to see record highs last summer. But ole K-dogg said it just felt like “a natural bookend” to his 13 years.
He also apparently notified the board a year ago that he’d be considering retirement now. If that is true, how in the world is the board caught flat footed here? They’ve had a year to put a succession plan in place and they haven’t. Unfortunately, they lost previous COO, Roz Brewer, 14 months ago as she left to be CEO of Walgreens (and if she’s behind the decision to utilize Cooler Screens that we mentioned yesterday…..than forget her).
Just not sure how they can explain this one. It must make investors question if something else is/was at play here. I did hear Starbucks’ Board Chairwoman, Mellody Hobson, state that they are excited to “call up one of the game’s greatest MVPs” …..Howard Shultz (the Starbucks founder and former/longtime Chairman and CEO) to be interim CEO. And will apparently only be making a $1 salary (….but don’t get that confused with total compensation!!!)
This is one more thing the company must deal with in addition to the ongoing labor union discussions/fights being had with several of their locations around the US. Again, if I’m a shareholder I’m not too happy about all of this.
And if you’re a customer, you may not be too happy either as Starbucks is apparently getting rid of their iconic paper cups! Either bring your own reusable mugs or drink from proper glasses if enjoying your drink in the store.
All I can think of……how in the world will they overcome the inefficiencies when customers order their favorite specialty organic-non-fat-goat-milk-sugar-free-latte-with-extra-whipple-on-top-drink…and that same customer is holding their reusable mug in the drive-thru while they’re placing that order? Not sure if they’ll be able to figure all this out……without the help of Chick-fila!
Can Starbucks overcome all the above? As always, time will tell.
As I alluded to earlier this week…..today and tomorrow are perhaps my single most favorite days of the year. The start of March Madness baby!! “It’s Awesome baby, with a capital A!” #DickieV Above is my bracket filled out. Let’s Go!!!
I know how much you (read: I) love to be in the know so here are some important and interesting facts regarding March Madness, the brackets we fill out and other worthwhile tasty bite-sized facts.
We first must go back to London in 1851…….
- They organized the first ever world fair. People from all over the world came to see it. And the first most epic Chess tournament began (Chess people, not checkers!!!). That tournament had 16 players and they ended up in a single elimination bracket until it came down to the best two players and ultimately the champion. And thus began the “Tournament Bracket”.
- In 1939 the National Association of Basketball Coaches (NABC) decided to adopt the bracket for a post season tournament of its own…….also in a single elimination format (which only saw 8 teams at first including OU, Oregon, Brown, Ohio State, Texas, Utah State, Villanova and Wake Forrest…..spoiler alert: Oregon won.)
- NCAA then took over the tournament in 1940, keeping the same format…..after a few iterations the field was expanded to 64 teams in 1985 where it stands today.
- Bracket picking by the masses didn’t really gain major traction until after 1975.
- In 1977, 87 people gathered at a bar in Staten Island called Jody’s Club Forrest where they came up with the idea of picking the winners of each game and assigning points for each correct pick. The person with the most points won the pool.
- By 2006, more than 150,000 people were filling out brackets at Jody’s!
- Now MILLIONS & MILLIONS & MILLIONS & MILLIONS of people fill out brackets today all around the world.
- And we can all thank a Chess playing lad from the 19th century.
Those bites are tasty. But the absolute best part of the NCAA tournament is the potential upsets that tend to happen early in the tournament (hence, today and tomorrow being my favorite days). Click HERE to watch some of the greatest March Madness upsets of all time!
Deuces. ✌️