Looking back at the first week of the year, it was mentioned that the U.S. might not be in the market until April due to the “cash handout” effect! Perhaps, it is really not true at the moment, and what is the signal this week? Inflation!
[1, all things rise? P&G plans to increase the price of household goods]
The epidemic so far, the world continues to pump water, has been “everything up” time? U.S. consumer goods company Procter & Gamble (P&G) announced this week that it is preparing to raise the selling prices of some consumer products due to rising commodity prices.
P&G’s brands include baby products Pampers (Pampers), women’s products Always, etc.. The company noted that it has started to raise prices for products in the infant, feminine care and adult care categories because production costs for diapers and other products are rising.
P&G said in its earnings announcement on Tuesday (20) that the price increase is expected to take effect in September and could raise prices by 5 to 9 percent. The company’s chief executive Jon Moeller said the company will adjust “where necessary” to offset specific costs, and plans to focus on product innovation in order to raise prices while enhancing the real value for consumers.
P&G’s product price increases are expected to put pressure on retailers, while the costs may also be passed on to the masses of consumers, reflecting rising commodity prices and logistics problems pulling up the cost of manufacturers, inflationary pressures on consumers continue to intensify.
[2. Everything is going up? Wool prices rose to a 1-year high]
In addition to daily necessities, wool is widely used in the production of clothing, but this year, wool prices continue to rise, has risen to a 1-year high, mainly due to the steady purchase of China. Some analysts say, because Japan, Europe and the United States and other places for clothing demand has not yet recovered, coupled with the main wool producing countries in Australia’s production capacity is also recovering, in the short term, wool prices may appear to adjust the situation, but in the long term will go up.
Foreign media reported that Australia accounts for about 40% of global wool exports, while China imports 80% of Australian wool. Although China has recently implemented measures to increase taxes or stop imports of barley, meat and wine from Australia, wool has not been affected and normal purchases have been maintained.
According to the Australian local wool indicator auction price, in mid-April was A$12.91 per kilogram, while in September last year, this price was A$8.58, an increase of about 50%. According to Japan Woolen Company, China uses ultra-fine wool underwear and double-sided fleece jacket demand increased, but data show that the factory gradually return to work, the short-term view of wool prices may be adjusted.
The Australian Wool Development Company (Australian Wool Innovation, AWI) has raised its wool production forecast 2 times, believing that Australian wool production from July last year to June this year is expected to reach 287,000 tons, the original forecast was 276,000 tons.
[3. Everything is rising together? Japan “block bear” speculation to the “sky”]
Speaking of price increases, there is no shortage of human factors! China’s generation born after 1990 is eager to “get rich overnight”, in recent years, not only speculation blind box, speculation funds, speculation sneakers, now replaced by “speculation bear”. Foreign media reported that a “block bear” originally from Japan, originally priced at 2,000 yuan, was speculated to 30,000 yuan, and a limited edition was even speculated to 144,999,000 yuan. The domestic media warned that young people following the trend of “speculation bear”, in the end, fear to face the fate of “cut leeks”.
By the young people of mainland China is a lot of hype is the Japanese toy company Medicom Toy in August 2001, launched a wooden toy called Bearbrick, also known as the block bear or violence bear, a total of six sizes, each body printed with colorful pictures, limbs can also be placed at will.
The main reason for the popularity of Block Bear is that Medicom Toy has collaborated with major brands, designers or artists to launch various co-branded limited edition products, some of which have been sold at auctions for high prices, thus making the product a luxury trendy item. The reason for the hype of Block Bear in China is not only due to the celebrity effect, but also based on the influence of the product release mechanism. It is said that Medicom Toy’s block bears are pre-sold in the form of lottery, and are only available in Japan in limited quantities, with fewer items and more people buying them, the price will rise more expensive.
The report quoted mainland netizens that the “bear” craze and logistics, because the epidemic in Japan’s logistics have stopped, so players want to buy the bear, only from the hands of people with pipelines to buy, the price naturally rose. In addition, many people buy bears not because they like them, but because they think they are expensive and hard to buy, so some non-collectors have started to join the ranks of buying bears, leading to a growing demand.
The mainland media searched for block bears on an e-commerce platform and nearly 2,000 items appeared, with prices ranging from more than 100 RMB to more than 100,000 RMB, including a 6th anniversary limited edition block bear measuring 72 cm, which sold for as much as 144,999 RMB.
Recently, many young Chinese people have been targeting the “bear speculation” business opportunity, and have begun to buy large quantities and choose the opportunity to sell at a high price. A microblogger with tens of thousands of followers has been sharing online videos of people who have made a fortune from “bear speculation”, and there is no shortage of admiring voices in the comments section, as some young people have been stimulated by the huge profits to enter the market, eager to make a fortune from “bear speculation”.
In the circle of friends on behalf of the sale of block bears, Fan said, “speculation bear” is a major reason for the prevalence of low threshold, neither expertise, nor a large amount of capital, a few thousand dollars to start, good luck, the return is very high. Some people will hoard bears in large quantities from “bear dealers”, creating the appearance of a shortage of goods, and then sell them at high prices on e-commerce platforms; players with sufficient funds can obtain a large number of upstream sources and gradually inflate prices, followed by some experienced scalpers or second-hand players to continue to speculate on the market, layers of profit, and the last to be harvested often small retail investors.
At the same time, some popular block bear also began to have a “cottage version”. In order to wash the counterfeit goods into the genuine, some sellers will even mainland production products first sent to Japan, and then sent back home, in order to disguise overseas shipments.
The first thing you need to do is to get a good idea of what you are getting. Coke to increase the price of netizens say “the end of the world”]
In addition to the above items, Coke is a lot of people’s regular drinks, and many foreigners “as water”, so the news of the proposed price increase came as quite a shock! James Quincey, chief executive of Coca-Cola, said this week that the company intends to raise prices because of the rising cost of goods. Although he did not explicitly say which products will increase prices, but has caused a hot debate. Some fans laughed that it was the “end of the world”, and some Pepsi supporters “gloated” in praise of the good, laughing that “good thing I drink Pepsi”.
Quincey said in an interview with the U.S. media, in response to the rising cost of goods, it is expected that next year may need to increase prices, but the company did not disclose which products under the company will increase prices and the rate of price increases. Foreign media said that although the price increase can improve the profits of Coke, but by the new crown pneumonia epidemic, consumer purchasing power suffered a big blow, the news undoubtedly increased the pressure on consumers.
The report said that Coke companies have invested more resources in the production of home packaging of cola to attract consumers who stay at home because of the epidemic, for example, during the epidemic, Coca-Cola and rival Pepsi are vigorously promoting finer cans of cola, which bring higher average profits. Coca-Cola reported 1Q revenue that beat Wall Street expectations, with the company saying demand in March was back to pre-epidemic levels.
Coca-Cola’s price increase for the last time was in 2018, when the company explained it was influenced by the Trump administration’s tariff hike on aluminum.
[5. All things are rising together? Russia-Ukraine tensions rise global food price increase fears intensify]
It must be mentioned that do not think that the continued tension between Russia and Ukraine is not a matter that will affect food prices! Foreign media reported this week that Russia plans to blockade foreign military vessels and other “official” ships connecting the Black Sea and the Sea of Azov Kerch Strait (Kerch Strait). Dennis Voznesenski, a grain and oilseed market analyst at Rabobank in Sydney, said that if the plan further affects commercial vessels, it could be a major problem for Ukraine.
Voznesenski noted that there are 2 important Ukrainian ports in the Azov Sea – Mariupol (Mariupol) and Berdyansk (Berdyansk), which account for about 5% of the country’s grain export capacity. The biggest risk is that the conflict will spread to other Ukrainian ports, including the southwestern region where the main export terminals are located, in which case the impact will be more global.
With data showing that Ukraine supplies about 10% of global wheat exports and 16% of barley exports, any disruption could have spillover effects and lead to higher grain prices. Grain prices are already moving higher as global agricultural supplies are now tightening due to cold weather in producing regions and rising demand from China.
Geopolitical risks in the region have been present since Russia’s annexation of Crimea from Ukraine in 2014. Russia is conducting the largest military buildup on the Russian-Ukrainian border, more countries are condemning Russia one after another, and if sanctions are imposed on the largest wheat exporter, it will have a huge impact on food prices.
Nick Orssich, vice president of Asia Pacific agriculture at StoneX in Sydney, said this could be a black swan event this year, where does the war break out and what impact will it have on food exports? People are increasingly wary of rising prices, as may be seen from options volatility.
Regional wheat prices rose in April as tensions rose. Since April 6, Chicago-traded July Black Sea wheat futures have risen about 10%.
[6. Everything is going up? The mainland actively “grain storage” Japan also has hidden worries]
In fact, China’s food crisis has surfaced since last year, this year the central government for the first time grain production into macroeconomic control objectives, but for the progress of this year’s spring production, the Ministry of Agriculture and Rural Affairs said that the weather outlook this year is not optimistic, drought, floods, extreme cold, extreme heat and other extreme weather may be more, Japan is also afraid of the outbreak of energy and food supply chain crisis!
However, the Ministry of Agriculture and Rural Affairs has a response early, intends to start from 3 aspects in order to ensure that grain production is stable at more than 1.3 trillion pounds, and even to rural areas as an important growth point for expanding domestic demand. Liu Lihua, deputy director of the local planting industry department, yesterday pointed out that to achieve the annual target of grain production, the local needs to further refine the binding indicators, such as the implementation of the minimum purchase price of rice and wheat; strengthen science and technology to improve production and complete the construction of 100 million mu of high-standard farmland tasks; disaster prevention, pest control and loss reduction, because this year there may be extreme weather, there is a major pest situation. The authorities have formulated a budget plan for disaster prevention and mitigation as early as possible, instructed localities to implement scientific measures to combat disasters, and organized the operation of “insects to seize food and ensure a good harvest” to effectively reduce losses from meteorological disasters and pests to ensure a good harvest.
The mainland’s official agricultural outlook report also handed out “reassurance” that basic food is “absolutely safe” and predicted that the national production of the three major staple foods will increase this year, including wheat and rice production will reach 135 million tons and 214 million tons, respectively. The total production of wheat and rice will reach 135 million tons and 214 million tons respectively, an annual increase of 0.6% and 1.3%, while corn production can reach 270 million tons; the next 10 years, the mainland’s food supply security will be more powerful.
However, from the point of view of the planting benefits in 2020, the planting benefits of corn than soybeans, so farmers tend to plant corn. As the central government attaches great importance to food production this year, and corn has a prominent role in ensuring food security, it is expected that this year’s soybean planting area will be adjusted downward by 5.4% to 140 million mu, the total output also fell to 18.65 million tons, reversing the situation of the past five consecutive years of increase in both.
At the same time, the mainland food import demand is still strong. General Administration of Customs data show that last month’s imports of soybeans from the United States surged 3.2 times to 7.18 million tons, leading to a 1.01 times year-on-year surge in food imports to 12.71 million tons. Not only that, barley and corn imports were 2.86 times and 5.86 times year-on-year, respectively.
As for the pork price has been falling for nearly three months, the authorities pointed out that as of last Sunday, the national market price of pork has dropped to RMB 38.96 per kilogram, which is also RMB 20.68 lower than the highest level last year. Even though pork prices may rise in a wave around the Dragon Boat Festival, but the tightest period of pork supply has passed. According to the current production recovery momentum, the pig stock is expected to return to the normal year level in June and July this year, and the monthly slaughter volume will gradually return to normal in about 4 months.
It is worth noting that, in view of the situation in the Taiwan Strait continues to be tense, foreign media warned this week, once the outbreak of conflict, the fear of dragging Japan’s outbreak of energy and food supply chain crisis, the local food self-sufficiency rate of less than 40%, while accounting for 40% of Japan’s power generation of liquid natural gas (LNG), its supply mainly from Australia, South Asia and the Middle East through the South China Sea imports. If merchant ships can not freely navigate the East China Sea and the South China Sea because of the U.S.-China military standoff lasting 6 months, the supply chain of basic materials such as fuel and food will be disrupted and the Japanese economy will be in chaos.
[7. Everything is rising together? The rumor of panic hoarding chip 20 times the price difference sweep]
Talking about the rise of everything, how can there be no “core”? China’s General Administration of Customs data show that imports of semiconductors worth $35.9 billion in March, a single-month high. Some market sources said this week that the semiconductor industry has been panic stockpiling, and some Chinese companies are acquiring chips on the global market at a spread of up to 20 times. Because the safety stock has bottomed out, so the current purchase even if the price, continue to place orders, but also can not ensure the required number.
Sources pointed out that some micro control unit (MCU), for example, last year for each $ 8, is currently soaring to $ 50, more than six times last year. Now the market is generally up 8 to 10 times the price, all chip companies are facing great pressure. Especially small and medium-sized chip makers, package experts design chip companies, because there is no bargaining power, has been directly outside the foundry cut single.
Gu Wenjun, chief analyst of core research, said that recently a Chinese design company was a long-term cooperation with overseas foundries to cut orders, as a last resort, with ultra-high prices to fight for 300 pieces.
The phenomenon of panic hoarding is not only happening in chip companies, but also in downstream end products, including cell phone factories. realme China president Xu Qi said that the previous cell phone supply chain stocking is generally enough for 8 months, but the company has prepared a full year of quantities in advance.
[8. vision! Goldman Sachs: U.S. stocks broke the top but the VIX fell back to fear the eve of the storm]
Inflation dragging down financial markets may be the trigger, and the anomaly also seems to cooperate! U.S. stocks fell on Monday (19), commonly known as the “panic index” of the VIX index at a low level, Goldman Sachs warned that this phenomenon may be the calm on the eve of the storm.
Data show that the S&P index rose nearly 10% in the past six weeks, the VIX index was suppressed below 17 points, for the first time since the epidemic. The decline in panic was accompanied by a reduction in U.S. stock trading volume, with the S&P’s average trading volume as a percentage of market capitalization the lowest since April and the lowest since January 2020.
Goldman Sachs noted that a situation similar to the above occurred in 1997 and 1998. Notably, shortly after this occurred, market volatility increased significantly.
[9. Beware that U.S. stocks may have peaked! All therefore the vision…]
In addition to Goldman Sachs, some experts have analyzed the U.S. stock market data since 1926 and found that the “high momentum stocks” that were riding on the market momentum were not topping out at the same time as the average market index, but losing momentum weeks in advance. This anomaly is now reappearing.
Mark Hulbert, a well-known investment newsletter and columnist who specializes in learning from history, said that the iShares MSCI U.S. Momentum ETF fell 0.2% in the first quarter, compared to the 6.4% rise in the S&P index in the same period, showing that the first quarter return of “momentum stocks” lagged behind. It is also the worst quarterly performance of the ETF since its launch in 2013. The ETF is the largest of the ETFs tracking U.S. dynamic stocks.
Other market signs also indicate that the mood in U.S. stocks is beginning to shift. Bank of America Global Research reported that last week’s net outflow of $5.2 billion from the U.S. stock market was the largest since mid-November last year and the fifth largest since 2008. The Bank of America pointed out that retail investors were buyers for eight weeks in a row, while funds were sellers for three weeks in a row.
10, China and the United States fear to fight “cyber war” at any time accidentally detonate nuclear war]
Finally, I want to share is that, as the battle between the United States and China heats up, the world is afraid to usher in a sudden “nuclear war”! George Perkovich, vice president of the Carnegie Endowment for International Peace, a U.S. think tank, pointed out this week that as the disagreements between the United States and the Chinese Communist Party in the East China Sea, South China Sea, Taiwan and other places become deeper, the possibility of escalating into conflict or even using nuclear weapons due to minor friction between them has also increased.
However, when both sides try to use cyber operations to gain early warning and early advantage in a crisis, the risk of “nuclear war” is greatly increased.
As the Chinese Communist Party continues its military build-up in the South and East China Seas, combined with its growing self-confidence and military intimidation of Taiwan, Washington has begun to think about strengthening its commitment and military power over its allies and partners. However, any small collision at sea or in the air could lead to a skirmish; at this point, as long as leaders on both sides feel they cannot show weakness and must demonstrate determination and strength, the conflict could escalate, and the risk of an “accidental war” (ACCIDENTAL WAR) rises.
In addition, the Chinese Communist Party may launch cyber warfare to offset the disbenefits of projecting traditional U.S. forces into China’s neighborhood; to add insult to injury, if the target of cyber warfare involves the U.S. nuclear command and control system, it will make the problem worse.
Chinese scholars worry that the U.S. will use cyber warfare to preempt and destroy China’s nuclear deterrence capabilities. In contrast, the United States is concerned about the use of cyber attacks by the Chinese Communist Party to undermine U.S. nuclear weapons superiority.
Perkovich pessimistically argues that such a grave risk cannot be completely eliminated.
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