4 ms·

So I keep hearing the same two narratives over and over, we printed money and what do we expect (?), and supply chain issues. However, there is a third (and lik

by fdye 5y ago

So I keep hearing the same two narratives over and over, we printed money and what do we expect (?), and supply chain issues. However, there is a third (and likely more) thing going on and that is megacorporate monopolies. Take toilet paper, the market has now completely consolidate on three major players (rule of three), Proctor & Gamble, Kimberly Clark, and Georgia-Pacific. Just looking at P&G we can see y/y (https://www.google.com/search?q=procter%26+gamble+q4+2021+earnings https://www.google.com/search?q=procter%26+gamble+q4+2021+ea...) Revenue 20.95B +6.12% Net income 4.22B +9.57% Diluted EPS 1.66 +12.93% Net profit margin 20.15% +3.23% During the last year they have paid ~3% dividend on top of buying back billions of stock (https://ycharts.com/companies/PG/stock_buyback https://ycharts.com/companies/PG/stock_buyback), in Q4 they increased their buyback from ~3B->4.75B. With all do respect supply chain/monetary policy concerns are a cover for what is really going on, lack of competition in the market. A rational market with multiple competitors and no price fixing, would prompt at least one of the competitors that is sitting on billions of extra money to drop prices. As a result they would increase sales and make up the profits in volume, this would prompt their competitors to follow suit or else lose customers and market share. You know Econ101. The market is not rationale right now as we have allowed these mega mergers and pushed out all small competitors. That 7.5% inflation is them coordinating prices and sticking the profits back into their investors pockets, then using supply chain and monetary policy as cover in the media.

d23 5y ago
I believe this is what Elizabeth Warren has been saying. It struck me as just political theater at first, but this is the second time I've seen people pointing out that profits for some of the largest corporations have actually been increasing.
HonestOp001 5y ago
Government edicts prevent any new players from entering the market. In our market we have supply and demand. Currently, there is demand chasing a shrinking supply. We wrecked the status quo by freezing the economy and the jobs held in place. With the stimulus checks, wages were forced up to overcome the challenge of people sitting at home or coming into work. Costs thus increased. Most of the suppliers have held back on price increases because they a. Do not want to hurt the consumer, b. Do not want to have the government thinking they are price gouging (which if you want to be new to market and provide a product similar to everyone else but at a much higher price to cover your entry costs, good luck with the opportunistic folks in congress looking to pin this on the corporations). The small businesses are not nimble enough to make paper towels because of capital investments not being there, the big players having a monopoly on store shelf space, and government agencies ready to swoop in and bury you in legal morass. Now we see the companies realizing they are all in this together, similar to when all the airlines simultaneously declared bankruptcy. I am not saying they are collusion to increase prices, I am saying they are inadvertently appearing to collude based on how they feel out the other corporations going.
sleepingadmin 5y ago
>So I keep hearing the same two narratives over and over, we printed money and what do we expect (?), and supply chain issues. Supply chain claims are fairly baseless. The assertion being that supply is low, demand stays the same. prices go up. The obvious argument is that when the supply chain issues are resolved, you would require deflation. Which is certainly not coming and not happening. >With all do respect supply chain/monetary policy concerns are a cover for what is really going on, lack of competition in the market. If this is true, the easiest way to become rich right now is to simply create competitors. >The market is not rationale right now as we have allowed these mega mergers and pushed out all small competitors. That 7.5% inflation is them coordinating prices and sticking the profits back into their investors pockets, then using supply chain and monetary policy as cover in the media. If this lack of competition is what is happening. They will actually come buy you out and shut you down. You likely wouldn't even have to do much to compete.
- CameronNemo 5y ago
  They will actually come buy you out and shut you down. There are a million anticompetitive maneuvers short of a buyout. Off the top of my head: * dumping to eat into your profit and bleed you out * punishing retailers who stock your items, or payment providers who service your site * buying up inputs for several cycles so that you cannot hope to even stock your goods
scohesc 5y ago
I feel a bit bittersweet knowing that all this "stuff" is going on behind the scenes. - Massive companies swallowing smaller, more agile, potentially more competitive companies like some uncaring amoeba allowing for massive silicon valley conglomerates like FAANG companies to influence public policy more and more in their favor, removing any sense of competition in a market, while politicians pad their wallets and purses on the side from "speaking fees" and cash handed under the counter. - Being told that we're being told by every single media outlet that "inflation is transitory, it'll be over soon" - reminds me of the outright lie of "two weeks to stop the spread" while governments rushed to figure out what they were actually facing instead of being honest. - Corporations moving to capture more industries that aren't even related to their original core business model to extract more value out of their users. Why does an e-commerce company like Amazon need to buy a fitness company like Peloton? Why does an advertising company like Google need to buy fitness companies like FitBit? Why did Jeff Bezos need to purchase Washington Post? I'd say "why would society let this happen to us?" but really it's more "Yeah, we did this to ourselves". I'm really not sure what the answer is and I'm not sure if there is only one, or two, or any answer at all. It's just depressing so I just ignore it until I hear about it again - maybe that's the problem?
sershe 5y ago
So, it looks like their revenue went down a tiny bit in inflation-adjusted dollars, and their margins are basically flat - 3% is noise; historically, too - the recent increase was due to a prior COVID drop [1] That doesn't look like monopoly abusing its power to me. [1] https://www.macrotrends.net/stocks/charts/PG/procter-gamble/profit-margins https://www.macrotrends.net/stocks/charts/PG/procter-gamble/... It is, though, an excuse used by pretty much every incompetent authoritarian politician from Russia to Venezuela.

by fdye 5y ago

d23 5y ago

I believe this is what Elizabeth Warren has been saying. It struck me as just political theater at first, but this is the second time I've seen people pointing out that profits for some of the largest corporations have actually been increasing.

HonestOp001 5y ago

Government edicts prevent any new players from entering the market. In our market we have supply and demand. Currently, there is demand chasing a shrinking supply. We wrecked the status quo by freezing the economy and the jobs held in place. With the stimulus checks, wages were forced up to overcome the challenge of people sitting at home or coming into work. Costs thus increased. Most of the suppliers have held back on price increases because they a. Do not want to hurt the consumer, b. Do not want to have the government thinking they are price gouging (which if you want to be new to market and provide a product similar to everyone else but at a much higher price to cover your entry costs, good luck with the opportunistic folks in congress looking to pin this on the corporations). The small businesses are not nimble enough to make paper towels because of capital investments not being there, the big players having a monopoly on store shelf space, and government agencies ready to swoop in and bury you in legal morass. Now we see the companies realizing they are all in this together, similar to when all the airlines simultaneously declared bankruptcy. I am not saying they are collusion to increase prices, I am saying they are inadvertently appearing to collude based on how they feel out the other corporations going.

sleepingadmin 5y ago

>So I keep hearing the same two narratives over and over, we printed money and what do we expect (?), and supply chain issues. Supply chain claims are fairly baseless. The assertion being that supply is low, demand stays the same. prices go up. The obvious argument is that when the supply chain issues are resolved, you would require deflation. Which is certainly not coming and not happening. >With all do respect supply chain/monetary policy concerns are a cover for what is really going on, lack of competition in the market. If this is true, the easiest way to become rich right now is to simply create competitors. >The market is not rationale right now as we have allowed these mega mergers and pushed out all small competitors. That 7.5% inflation is them coordinating prices and sticking the profits back into their investors pockets, then using supply chain and monetary policy as cover in the media. If this lack of competition is what is happening. They will actually come buy you out and shut you down. You likely wouldn't even have to do much to compete.

CameronNemo 5y ago
They will actually come buy you out and shut you down. There are a million anticompetitive maneuvers short of a buyout. Off the top of my head: * dumping to eat into your profit and bleed you out * punishing retailers who stock your items, or payment providers who service your site * buying up inputs for several cycles so that you cannot hope to even stock your goods

scohesc 5y ago

I feel a bit bittersweet knowing that all this "stuff" is going on behind the scenes. - Massive companies swallowing smaller, more agile, potentially more competitive companies like some uncaring amoeba allowing for massive silicon valley conglomerates like FAANG companies to influence public policy more and more in their favor, removing any sense of competition in a market, while politicians pad their wallets and purses on the side from "speaking fees" and cash handed under the counter. - Being told that we're being told by every single media outlet that "inflation is transitory, it'll be over soon" - reminds me of the outright lie of "two weeks to stop the spread" while governments rushed to figure out what they were actually facing instead of being honest. - Corporations moving to capture more industries that aren't even related to their original core business model to extract more value out of their users. Why does an e-commerce company like Amazon need to buy a fitness company like Peloton? Why does an advertising company like Google need to buy fitness companies like FitBit? Why did Jeff Bezos need to purchase Washington Post? I'd say "why would society let this happen to us?" but really it's more "Yeah, we did this to ourselves". I'm really not sure what the answer is and I'm not sure if there is only one, or two, or any answer at all. It's just depressing so I just ignore it until I hear about it again - maybe that's the problem?

sershe 5y ago

So, it looks like their revenue went down a tiny bit in inflation-adjusted dollars, and their margins are basically flat - 3% is noise; historically, too - the recent increase was due to a prior COVID drop [1] That doesn't look like monopoly abusing its power to me. [1] https://www.macrotrends.net/stocks/charts/PG/procter-gamble/profit-margins https://www.macrotrends.net/stocks/charts/PG/procter-gamble/... It is, though, an excuse used by pretty much every incompetent authoritarian politician from Russia to Venezuela.