The Bear Market Descends

The fear is palpable.

At the Wall Street Journal, "Dow Drops Over 800 Points; S&P 500 Closes in Bear-Market Territory as Stocks Slide":

Investors raise bets on aggressive Federal Reserve interest-rate increases; cryptocurrencies decline.

The stock-market selloff deepened Monday, with the S&P 500 entering a bear market, as investors took another look at Friday’s red-hot inflation data and liked it even less.

Faced with rising chances of aggressive monetary tightening by the Federal Reserve, investors broadly unloaded risk. The S&P 500 slumped 3.9% as 495 of its 500 components ended the day lower. The declines left the U.S. stock benchmark down more than 20% from its January record, sending it into a bear market for the first time since 2020.

Meanwhile, a rout in cryptocurrencies highlighted investors’ increasing unwillingness to hang on to their most speculative holdings. The price of bitcoin plunged below $23,000 before paring that loss to trade at 5 p.m. ET down 66% from its November high.

The drop in cryptocurrencies accelerated Monday after interest-rate fears sparked a weekend selloff. Bitcoin, the biggest cryptocurrency, traded at 5 p.m. at $23,250.72, a drop of 15% from 24 hours earlier. Ethereum was down 16% from 24 hours earlier to about $1,243. Shares of Coinbase Global fell 11%, while Celsius Network said it was pausing all withdrawals, swaps between cryptocurrencies and transfers between accounts, citing “extreme market conditions.”

Even rare bets that have worked in 2022 stumbled Monday. The energy segment, the only one of the S&P 500’s 11 sectors in positive territory this year, fell 5.1%, a steeper decline than that of the broad index. The utilities group, the second-best performer in 2022, also lagged behind the market with a daily drop of 4.6%.

“We’re definitely seeing a risk-off atmosphere, a flight to quality,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. “In that environment, people need to raise cash.”

The S&P 500 fell 151.23 points, or 3.9%, to 3749.63. The Dow Jones Industrial Average dropped 876.05 points, or 2.8%, to 30516.74. The tech-heavy Nasdaq Composite declined 530.80 points, or 4.7%, to 10809.23, off 33% from its November record.

Markets have swung wildly this year as investors scramble to decipher how rapidly the central bank will raise interest rates in an attempt to tame sky-high inflation. Rock-bottom rates and other stimulative policies helped keep the economy—as well as markets—afloat as the arrival of the Covid-19 pandemic idled businesses and threw people out of work.

Now, the Fed is trying to tame surging prices by unwinding that easy-money policy. The Fed will begin its latest two-day policy meeting Tuesday, and most investors believe that the central bank will announce Wednesday it is raising its benchmark interest rate by half a percentage point...

Still more.

 

'That Doesn't Feel Like $150 Worth of Groceries'

From Samuel Gregg, at Bari Weiss's Substack, "Why inflation is worse than you think."

Jeremy S. Adams, Hollowed Out

At Amazon, Jeremy S. Adams, Hollowed Out: A Warning about America's Next Generation.

Poll Shows Americans Have Dim View of the Economy, Government, and Global Elites

I still see articles saying the Democrats have a chance in November, blah, blah. If you see stuff like that, fugetaboutit.

The left will be crushed in the midterms. We're in a national malaise, certainly worse than the 1970s, when President Jimmy Carter --- during the oil shocks from the Middle East --- told Americans to turn the thermostat down in winter.

People will not stand for this much longer.

At the Wall Street Journal, "Inflation, Political Division Put U.S. in a Pessimistic Mood, Poll Finds":

Americans are deeply pessimistic about the U.S. economy and view the nation as sharply divided over its most important values, according to a new Wall Street Journal-NORC Poll.

The findings are from a Journal survey conducted with NORC at the University of Chicago, a nonpartisan research organization that measures social attitudes. The survey found Americans in a sour mood and registering some of the highest levels of economic dissatisfaction in years. The pessimism extended beyond the current economy to include doubts about the nation’s political system, its role as a global leader and its ability to help most people achieve the American dream.

Some 83% of respondents described the state of the economy as poor or not so good. More than one-third, or 35%, said they aren’t satisfied at all with their financial situation. That was the highest level of dissatisfaction since NORC began asking the question every few years starting in 1972 as part of the General Social Survey, though the poll’s 4-point margin of error means that new figures may not differ significantly from prior high and low points.

Just over one quarter of respondents, 27%, said they have a good chance of improving their standard of living—a 20-point drop from last year—while just under half of respondents, 46%, said they don’t.

The share of respondents who said their financial situation had gotten worse in the past few years was 38%. That marked the only time other than in the aftermath of the 2007-09 recession that more than three in 10 respondents said their pocketbooks were worse off, according to GSS data going back a half-century.

The survey results show that high inflation in particular is driving the dim economic outlook, said Jennifer Benz, vice president of public affairs and media research at NORC. Inflation is running at close to its fastest pace in four decades, at an 8.3% annual rate in April, one of several factors weighing on consumers. Households are digging into savings to support their spending, the Commerce Department has said, and the S&P 500 nearly closed in bear territory recently.

The labor market has been an economic bright spot, with the unemployment rate close to a half-century low, at 3.6% in May. In the survey, about two-thirds of respondents said it would be somewhat or very easy to find a new job with about the same income and benefits. That was one of the highest levels on record since GSS began asking the question in 1977.

Still, the results suggest that Democrats, who control the White House and Congress, face a dispirited electorate heading into November’s elections. Other pollsters say economic issues are the top concern for voters, and they are likely to hold the party in power accountable for high inflation that has made housing, groceries, gas and other essentials more expensive.

More broadly, the survey reveals a despondent view of national unity and partisan splits over cultural issues, suggesting that a connective tissue of pessimism underlies Americans’ economic and social attitudes. Some 86% of respondents said Americans are greatly divided when it comes to the most important values, and over half said they expect those divisions to worsen five years from now, up from just a third of respondents who were asked the question last year.

“In the prior years that we’ve asked this question, there’s at least been some hope, a little bit more hope, that things might get better,” Ms. Benz said. “That’s a key difference underlying all of this right now.”

About six in 10 respondents said they were pessimistic about the ability for most people to achieve the American dream...

 

Let the Pre-Criminations Begin: NBC 'News' Interviews White House Staffers and Discovers That Joe Biden Is a Very Cranky Old Man Who's Blaming His Staff For His Disastrous First (and Only) Term

 At AoSHQ, "Before getting to that -- and it's worth getting to -- I'll note that Biden's approval rating has fallen to 34% in the latest Civiqs poll, and, interestingly, he's underwater in 47 of the 50 states (57 according to the Greatest Intellect On Earth)."

The Market Is Melting Down and People Are Feeling It. ‘My Stomach Is Churning All Day.’

I don't have to take disbursement from my Roth IRA or my 403(b) until I'm 69, which is still a ways off. Hence my funds, with luck, will recover after the economy emerges out of the coming recession.

But folks who had immediate plans? They're fucked.

At WSJ, "Many are watching investments they meant for down payments, tuition or retirement shrink day after day":

The last time Todd Jones heard this kind of panic in his clients’ voices, it was 2008 and the global financial system was on the brink of collapse.

Mr. Jones, the chief investment officer at investment advisory firm Gratus Capital in Atlanta, now finds himself fielding similar calls. Two clients, both retirees, asked him this month to move their portfolios entirely to cash. Mr. Jones persuaded them to stay the course, saying the best way for investors to achieve their goals is to still be in the market when it eventually rebounds.

“Those people were not in a good place,” said Mr. Jones, 43. “They had a lot of anxiety about goals and dreams and being able to live their lifestyles.”

Stocks, bonds and other assets are getting hammered this year as investors wrestle anew with the possibility that the U.S. is headed toward recession. On Friday, the Dow Jones Industrial Average recorded its eighth straight week of declines, its longest such streak since 1932. The S&P 500 flirted with bear-market territory.

Families are watching the investments they meant for down payments or college tuition or retirement shrink, day after day. They’ve seen big retailers like Walmart and Target record their steepest stock drops in decades this week, after earnings that signaled an end to the pandemic spending boom.

The market turmoil has scared corporate chieftains away from taking their companies public. In Silicon Valley, dreams of multibillion-dollar valuations have been replaced by the reality of layoffs and recoiling investors.

Stock prices have been hurt by forces that appear in nearly every cycle, such as rising interest rates and slowing growth. There are also idiosyncratic ones, including the rapid return of inflation after decades at a low ebb, a wobbling Chinese economy and a war in Ukraine that has shocked commodity markets.

The Federal Reserve has raised interest rates twice this year and plans to keep doing so to curb inflation, but that makes investors worry it will slow the economy too fast or by too much.

To investors it can feel there is no safe place. While the vast majority of individual investors are holding steady, that is in part because customary alternatives don’t offer much relief. Bonds, normally a haven when stocks are falling, have also been pummeled. The cryptocurrency market, pitched as a counterweight to traditional stocks, is sinking.

For Michael Hwang, a 23-year-old auditor in San Francisco, the market’s tumble means he could wind up taking out loans to get an M.B.A. He has been hoping to pay his tuition out of pocket when he eventually goes back to school.

For Arthur McCaffrey, an 80-year-old retired research scientist from Boston, it means wondering if he’ll live to see his investments recover.

Rick Rieder, the head of fixed income at giant asset manager BlackRock Inc., likened the state of financial markets to a Category 5 hurricane. The veteran bond trader has been in the business for three decades and said the rapid price swings are unlike anything he has seen...

Keep reading.

 

Karine Jean-Pierre Gets Off to Rough Start (VIDEO)

Cringeworthy.

DOOCY TIME: Biden's "Twitter posted the other day, 'You want to bring down inflation? Let’s make sure the wealthiest corporations pay their fair share.' How does raising taxes on corporations reduce inflation?"

Karine Jean-Pierre: "So, are you talking about a specific tweet?" pic.twitter.com/8z1F5puDAR

— Curtis Houck (@CurtisHouck) May 16, 2022

Things Are Looking Very, Very Grim for Democrats

From Andrea Widburg, at American Thinker, "Hart Research Associates, a Democrat-run polling organization, released a poll taken from May 5 to 10 that asked voters about various issues as well as their general feeling about how the country is doing."

The Age of Rationing

From David Dayen, at the American Prospect, "From pandemic supply chain snarls to baby formula shortages, we forgot that physical production isn't magic, and we need to engineer it for stability."

Democrats' Electability Argument Falling Flat in 2022

From Amy Walter, at the Cook Report:

For the last six years, the one thing that has kept the Democratic Party unified and motivated is Donald Trump. Fear and loathing got Democrats to turn out in the 2018 midterms, and kept those voters engaged in 2020. Sure, the party was divided ideologically and generationally, with liberals and younger voters flocking to the Bernie Sanders wing and older, Black and more moderate Democrats sticking with Joe Biden. But, at the end of the day, both sides understood that the most important and existential issue was defeating Trump.

This strategy for the 2018 midterms was summarized best by then-Minority Leader Nancy Pelosi's slogan of "Just win, baby." Primaries were for picking the candidates who could win these swing CDs, not for intra-party ideological warfare. In 2020, Democrats rallied behind the more centrist Biden simply because they believed he provided Democrats the best chance to beat Trump that fall.

But, with Trump no longer in the White House and Biden's approval ratings underwater, the electability message is falling flat in Democratic primaries. In 2018, Democratic candidates prevailed in GOP-leaning CDs by leaning into a message of bipartisanship. Today, however, a restive Democratic base, discouraged by a lack of action on many of their key issues (like climate and student loan debt), and frustrated by GOP attacks on issues like abortion and election integrity, want fighters, not unifiers as their candidates...

RTWT.

 

Stocks Skidded Friday, Dow Dropping More Than 900 Points in Broad Investor Selloff

Shoot, another week like this one and the Dow will be in correction territory. My funds squeaked out of the first quarter with a mild $500 loss, but if this keeps going, I'll be taken to the cleaners --- and imagine how everybody else feels! 

Oh boy this is going to be a rocky year, just in time for the November midterms!

At CNBC, "Dow plunges more than 900 points for its worst day since 2020, falls for a fourth straight week":

And at the Wall Street Journal, "Tech Rout Drags Nasdaq to Worst Month Since 2008":

Tech-heavy index slid more than 4% Friday, bringing its losses for month to 13%.

An April rout in technology stocks deepened Friday, dragging the Nasdaq Composite to its worst monthly performance in more than a decade, as soaring inflation and rising interest rates fanned worries of a recession.

The broad selloff has erased trillions of dollars in market value from the tech-heavy gauge, with investors souring on shares of everything from software and semiconductor companies to social-media giants.

The Nasdaq dropped 4.2% Friday, bringing its losses for the month to more than 13%, its worst showing since October 2008. The index is down 21% in 2022, its worst start to a year on record.

The broader S&P 500 has fallen for four consecutive weeks, shedding 8.8% in April and bringing its year-to-date losses to 13%. The Dow Jones Industrial Average fell 4.9% this month and is down more than 9% this year. Both indexes logged their worst months since March 2020.

The punishing declines in tech and growth stocks mark a dramatic shift from recent years. Investors have ditched shares of some of the biggest tech companies, which had been stock-market darlings for much of the past decade and propelled the indexes’ gains from the pandemic lows.

Within just a few months, some of the most reliable winners morphed into losers. Netflix dropped 49% in April. Nvidia fell 32%. And PayPal Holdings declined 24%. All three stocks are down more than 35% in 2022.

Worries about the Federal Reserve raising interest rates, soaring inflation and the path of the economy have brought stocks sharply lower from the record levels at which they started the year. Many pandemic-era winners also have come falling back to earth as consumer tastes have evolved since 2020. And recently, earnings season has been dotted with some high-profile disappointments, delivering head-spinning one-day stock moves following the reports.

“We’re going into a higher volatility regime, when fundamentals matter again,” said Aashish Vyas, investment director at Resonanz Capital. “It does seem like we are at a systemic shift.”

The FAANG stocks, consisting of the popular quintet of Facebook parent Meta Platforms, Apple, Amazon.com, Netflix and Google parent Alphabet, have collectively lost more than $1 trillion in market value this month, the most since Facebook started trading in May 2012.

Investors say they will be tracking the next batch of earnings results in coming days for signs of slowing growth from other companies. So far, corporate profits are on track to rise 7% for the quarter, according to FactSet, the lowest year-over-year earnings growth rate since the last quarter of 2020....

The latest gross domestic product data showed that the economy recently contracted for the first time since early in the pandemic. Meanwhile, inflation accelerated in March to its fastest pace since 1982, measured by the Federal Reserve’s preferred gauge.

Despite higher prices, U.S. consumer spending for March increased 1.1% from the prior month, showing that American households are absorbing high inflation. Some investors say shares of some tech companies look attractive after the recent selloff, and that they would consider stepping in to buy shares. The Nasdaq is now down 23% from its high and trading at levels not seen since 2020.

Friday’s losses in the stock market accelerated into the closing bell, which some traders attributed to technical factors such as hedging activity and trading by leveraged exchange-traded products. The Dow sank more than 900 points, or 2.8%, and the S&P declined 3.6%...

 

Congressional Midterms: Democrats Weak on Key Issues; Republicans Perceived as Party Better Able to Deal With Top Issues

At Marist, "NPR/PBS NewsHour/Marist National Poll: The 2022 Midterms & Biden’s Job Performance, April 2022":

The big question at this point is how many seats Republicans will gain. They picked up 64 seats in the House in 2010, and 54 in 1994. I haven't paid attention to the Senate. Can they pick up 10 seats and get to a filibuster-proof majority? This year's the year if there was one.

And from a couple of weeks ago, Larry Sabato, "Are Democrats Headed for a Shellacking in the Midterm Election?":

There appears to be a growing consensus among pundits and political observers that Democrats are likely to experience a shellacking in the 2022 midterm elections, especially in the House of Representatives. According to observers such as Chuck Todd and Mark Murray of NBC News, a number of indicators are now pointing toward major losses for Democrats, especially President Biden’s poor approval rating and the large proportion of Americans who believe that the country is currently on the wrong track or headed in the wrong direction...

Still more.

Biden Administration to Open Public Land for Drilling (VIDEO)

At the video, in California alone this would bring roughly 3,000 high-paying jobs and $600 in tax revenue.

And at the New York Times, "Biden Plans to Open More Public Land to Drilling":

The president is under pressure to bring down gas prices, but any new drilling would be years away. The fees that companies pay would rise sharply.

WASHINGTON — The Biden administration announced on Friday that it would resume selling leases for new oil and gas drilling on public lands, but would also raise the federal royalties that companies must pay to drill, the first increase in those fees in more than a century.

The Interior Department said in a statement that it planned next week to auction off leases to drill on 145,000 acres of public lands in nine states. They would be the first new fossil fuel leases to be offered on public lands since President Biden took office.

The move comes as President Biden seeks to show voters that he is working to increase the domestic oil supply as prices surge in the wake of the Russian invasion of Ukraine. But it also violates a signature campaign pledge made by Mr. Biden as he sought to assure climate activists that he would prioritize reducing the use of fossil fuels.

“And by the way, no more drilling on federal lands, period. Period, period, period,” Mr. Biden told voters in New Hampshire in February 2020.

In opening new land for drilling, while at the same time requiring companies to pay more to drill, Mr. Biden appears to be trying to walk a line between trying to both lower gas prices and fight climate change. While Mr. Biden came into office with the most ambitious climate change agenda of any president in history, his climate policies have been largely stalled, stymied by inaction in Congress.

Upon taking office, Mr. Biden issued an executive order calling for a temporary ban on new oil and gas leasing on public lands, which was to remain in place while the Interior Department produced a comprehensive report on the state of the federal oil and gas drilling programs. That report, issued in November, recommended an overhaul of the rents and royalty fees charged for drilling both on land and offshore. The report noted one estimate that the government had lost up to $12.4 billion in revenue from drilling on federal lands from 2010 through 2019 because royalty rates have been frozen for a century.

In opening up the new public lands for oil and gas permitting, the Interior Department will raise the royalty rates that companies must pay to the federal government to 18.75 percent of their revenues from 12.5 percent, an increase that could bring in billions of dollars for the federal government. Even at current levels, the royalties are a major source of revenue. Last year, the federal government collected $5.5 billion from drilling on public lands.

“For too long, the federal oil and gas leasing programs have prioritized the wants of extractive industries above local communities, the natural environment, the impact on our air and water, the needs of tribal nations, and, moreover, other uses of our shared public lands,” Interior Secretary Deb Haaland said. “Today, we begin to reset how and what we consider to be the highest and best use of Americans’ resources for the benefit of all current and future generations.”

The new lease sales mark the second major step the Biden administration has taken to open up public lands and waters for drilling.

Federal Reserve Expected to Raise Rates at Half Percentage Increments to Help Cool Inflation

The Fed folks are freaking out. 

Inflation is battering consumers, home owners, businesses, travelers, and agriculture, industrial, and manufacturing concerns, to name a few. Fuel prices remain at record levels, generalized inflation is spilling over to the rest of the economy, and continuing supply chain pressures (especially from China amid a new coronavirus crackdown) are crimping the availability of a variety of foods, consumer products, and basic industrial inputs, etc. As noted preciously, it's getting so bad consumers are even cutting back on basic necessities.  

People are hot and mad too. Inflation is the number one concern of regular Americans. And depending on how fast the Fed pulls the switch, there's some alarm that a recession could be coming down the pike.

Things aren't likely to cool off before the November midterms either. President Biden's so rattled and confused he's been cursing at members of the White House reporting pool.  

At the Wall Street Journal, "Fed Signals Faster Pace of Rate Increases, Bond Runoff Likely":

Minutes show central bank officials in March spelled out plan for shrinking $9 trillion asset portfolio next month to help cool inflation.

Federal Reserve officials signaled they could raise rates by a half-percentage point at their meeting early next month and begin reducing their $9 trillion asset portfolio as part of their most aggressive effort in more than two decades to curb price pressures.

Minutes from the Fed’s March 15-16 meeting, released Wednesday, showed that many officials last month were prepared to raise rates by a half-point but opted for a smaller, quarter-point increase because of concern over the fallout from Russia’s invasion of Ukraine.

Stocks fell and bond yields rose in the midst of expectations of a more aggressive Fed policy tightening process than previously anticipated. The yield on the benchmark 10-year Treasury note, which rises when bond prices fall, climbed to 2.606%, a three-year high, from 2.554% on Tuesday and 2.409% on Monday. The Nasdaq Composite dropped 2.2%, while the S&P 500 fell 1% and the Dow Jones Industrial Average was down 0.4%.

Officials last month approved their first interest rate increase in more than three years, raising their benchmark rate to a range between 0.25% and 0.5%. They also penciled in a series of additional rate increases this year to take rates closer to 2%, with inflation having surged to a four-decade high.

The minutes revealed for the first time how officials expect to shrink their asset holdings much faster than they did last decade, which would serve as another key tool for tightening monetary policy. Officials neared agreement on a plan that, after a roughly three-month ramp-up, would allow up to $95 billion in securities to mature every month without being replaced.

The Fed’s plans have sent tremors through the mortgage market, where the average 30-year fixed-rate mortgage rose last week to 4.9%, the highest rate since late 2018, according to the Mortgage Bankers Association.

In the three weeks since they last met, many Fed officials have indicated that they could support raising rates by a half-percentage point instead of the traditional quarter-point at their next meeting. The Fed hasn’t raised rates at consecutive policy meetings since 2006 and hasn’t raised rates by a half-point since 2000.

Investors in interest-rate futures markets now anticipate half-point increases at the Fed’s next meeting, May 3-4, and at the following gathering, in June.

On Tuesday, Fed governor Lael Brainard, who is awaiting Senate confirmation to serve as the Fed’s vice chairwoman and has previously been an influential voice warning against prematurely pulling back stimulus, underscored in a speech the importance of reducing high inflation.

Ellen Meade, a former Fed economist who is now a policy consultant, said that based on those remarks there is no reason not to expect a half-point increase. “It would have been an opportunity to push back at this point in time,” Ms. Meade said. “She really laid out the progressive case for why inflation fighting needs to be front and center.”

Consumer prices rose 6.4% in February from a year earlier, according to the Fed’s preferred gauge, the Commerce Department’s personal-consumption expenditures price index. Core prices, which exclude food and energy, climbed 5.4%. Those readings were the highest in around four decades.

Fed officials a year ago described higher inflation as transitory. They backed away from that characterization last fall, as the labor market healed rapidly and price pressures broadened to a range of goods and, more important, labor-intensive services.

Still, as recently as January, the Fed had expected inflation to diminish this spring as supply-chain bottlenecks improved. The war in Ukraine and potential lockdowns in China to deal with more-contagious variants of the coronavirus have ended any expectation of near-term relief from improving supply chains.

“That story has already fallen apart,” Fed Chairman Jerome Powell said March 21. “To the extent it continues to fall apart, my colleagues and I may well reach the conclusion we’ll need to move more quickly. And if so, we’ll do so.”

The central bank is still counting on inflation slowing later this year as supply-chain problems ease and as more workers return to labor markets. But unlike last year, Mr. Powell said the central bank could no longer set policy by forecasting that such relief would materialize.

“As we set policy, we will be looking to actual progress on these issues and not assuming significant near-term supply-side relief,” he said...

 

Former Labor Secretary Robert Reich Attacks Oil Companies, Calls for 'Windfall Tax on Higher Profits' (VIDEO)

Secretary Reich is a smart guy --- and he's always been a man of the left --- but he used to be more free-market, more for regular labor union agitation and better wages, etc. 

Nowadays, he sounds more and more like a doctrinaire Marxist. He's a Professor of Public Policy at U.C. Berkeley, so he's being marinated in the nasty stew of woke campus leftism. 

And here he's calling for a "windfall tax" on oil companies. 

Extreme tax proposals are de rigueur for Democrats these days. Bernie Sanders is calling for a 90 percent marginal tax rate on the wealthy. Thankfully, the idiot Dems will be out of power next January. President Biden's going to have to compromise on reviving domestic energy production, and if things go right, a Republican will win the 2024 general election.

Honestly, I love the guy, but please let it not be Donald Trump. One Trump term was enough.

Watch, at CNN, "CEOs at major oil companies come under fire for high gas prices."

With Inflation Not Letting Up, Shoppers Cut Back on Staples

I don't recognize my country. We're well into the third decade into the 21st century and Americans are cutting back on bare necessities, WTAF?!!

November is coming. I can't wait.

At the Wall Street Journal, "Consumers are buying detergent, diapers in smaller quantities and switching to store brands; 'It doesn’t smell as nice'":

Household staples are no longer immune to inflation.

American consumers are starting to cut costs on mainstays from toothpaste to baby formula as inflation hits a swath of the economy that had thus far proven resistant to substantial price increases.

Procter & Gamble Co., Clorox Co., Kraft Heinz Co. and other consumer-products giants have made a bet that consumers will pay up for household products even as inflation takes hold. Over the past year, the companies have seen profits and market share grow as they have raised prices on products from detergent and diapers to snacks and soda.

Now consumers, hit by soaring costs for everything from gasoline to child care, are drawing a line, analysts and retailers say. Shoppers are buying staples in smaller quantities, switching to cheaper, store-name brands and more rigorously hunting for deals. The shift is especially pronounced among lower-income consumers who splurged on household products amid the heights of the pandemic, they say.

Private-label brands, after two years in which they lost market share to brand names, have begun to lure back buyers. In the three-week period ended March 13, edible private-label brands increased share slightly and nonedible store brands held steady, according to data from research firm IRI.

Crystal Philips of Adams, Mass., said she has been feeling the pinch of higher prices for months, but started more seriously cutting costs in recent weeks after she spent $92 to fill the gas tank on the family’s vehicle.

Ms. Philips, with four children ages 6 to 18, replaced ornamental plants with vegetable seeds in her backyard garden, started shopping at discount grocer Aldi, and last week ditched her $7-a-bottle Tide detergent for a similarly sized bottle of Purex she found for $2.50 at a Dollar General.

“It doesn’t smell as nice,” she said of the detergent. “But I’m more concerned with feeding my family.” The most recently available data from the Bureau of Labor Statistics showed that the annual inflation rate had risen to 7.9%, a four-decade high, with oil and commodity market disruptions from the Ukraine crisis expected to add more cost pressures.

The consumer-staples industry “has crossed a threshold,” said Krishnakumar Davey, president of strategic analytics for IRI. “Consumers have been pinched for some time, they are observing that they are paying more and more, and they are beginning to drop some items from their basket because they can’t afford it.”

Grocery-industry executives say consumers are becoming more sensitive to price. They are switching to store brands for some products and increasingly trading down to cheaper items such as ground beef instead of steak.

“I was hoping that by now, things might have eased up a little bit, but it hasn’t slowed down,” said Steve Schwartz, who oversees buying and pricing at Morton Williams Supermarkets. He said he was notified of price hikes from bread and beer companies and expects further increases in the coming months.

Part of that shift is because private-label options are more available now than during the height of the pandemic, when high demand and supply-chain problems led manufacturers to shift products away from store brands in favor of pricier name brands, IRI’s Mr. Davey said. But consumer demand for cheaper items is also a factor, he and other analysts say.

Another telling sign: sales volumes have begun to fall in a number of categories, meaning people are buying mainstays in smaller quantities. Before and during the height of the pandemic, sales volumes of staples increased even as prices rose. On Feb. 22, volume sales of cereal were down 7.2% on a two-year compound basis; cleaning product volume sales fell 5.1% in that same period, according to a Bernstein analysis of Nielsen figures. Prices for those products rose 9.5% and 7.2%, respectively, for those categories.

RBC analyst Nik Modi said cost-cutting on staples is most pronounced among lower-income Americans. In part that is because income groups that typically buy lower-priced household goods switched to pricier brands amid the pandemic, as homebound consumers spent less on travel, dining out and other perks. Now budget-conscious consumers are returning to discount brands, he said.

P&G, for instance, has reported gains in both pricing and volume sales since the start of 2019, meaning consumers bought greater quantities of items at higher prices. The Cincinnati-based maker of Tide detergent and Pampers cut discounts and shifted to higher-end products in an effort to boost revenue. Consumers were willing to pay more, a trend that accelerated during the pandemic, when high demand led to product shortages of mainstays from paper towels to soap.

P&G executives say they are prepared for a downturn in consumer spending, but have told Wall Street they believe consumers will continue to covet items like Tide laundry-detergent pods, Gillette razors and Pampers diapers, which often are the priciest option on store shelves.

“Consumers continue to prefer P&G brands and superior performance they provide even as inflation is impacting household budgets,” P&G finance chief Andre Schulten said in a January call with analysts. The company declined to comment on consumer spending...

Markets End Down for First Quarter, Worst in Two Years

I hope my retirement accounts didn't take too drastic of a hit. I'm not getting any younger!

At WSJ, "Stocks Post Worst Quarter in Two Years Despite Strong Finish":

A head-spinning quarter came to a disappointing end, with major stock indexes suffering their worst performance in two years and other markets recording some of the most extreme moves on record.

The action reflects a sense of dislocation shared by many traders and portfolio managers who are confronting challenges not seen in years. Yet their unease has been offset in part by a fierce determination among many investors to take advantage of any price declines to add to positions in stocks, bonds and commodities.

Inflation has surged to its highest level in four decades, Russia’s invasion of Ukraine has rattled already stretched supply chains and the Federal Reserve has embarked on a rate-increase plan whose pace investors are struggling to handicap.

All three major U.S. indexes declined more than 1.5% on Thursday, with losses accelerating in the final hour of the session as traders dumped stocks to end the quarter. The declines have dragged the S&P 500 down 4.9% over the past three months, snapping a seven-quarter streak of wins. The Dow Jones Industrial Average and Nasdaq Composite have lost 4.6% and 9.1%, respectively, this year.

U.S. oil futures cleared $130 a barrel in early March, a level that flashed a warning signal for many economists. But the futures have since declined to around $100, a price that likely limits immediate economic damage but still marks the biggest quarterly gain since 2008.

“There are different parts of this market that rhyme with history, but really not even that well,” said Eric Veiel, head of global equities at T. Rowe Price, which oversees $1.5 trillion in assets. “This is a truly unique time.”

Underpinning the uncertainty that permeated the first quarter was the Fed’s plan to raise rates. In doing so, the central bank removed a historic wave of stimulus that had driven stocks to dozens of records over the past two years and fueled a rush into some of the most speculative investments in the market.

That made the recent market downturn markedly different from the crash in 2020, which was abnormally short and severe.

“The changes to our market views are just as dramatic as they were when the Covid-19 pandemic emerged two years ago,” Erik Knutzen, multiasset class chief investment officer at Neuberger Berman, wrote in a note to clients after the Ukraine invasion, adding that he is pessimistic about stocks over the next year.

Few assets were left untouched by the volatility. Investors have dumped bonds, sending yields on corporate and municipal bonds as well as Treasurys sharply higher. The Bloomberg U.S. Aggregate bond index—largely U.S. Treasurys, highly rated corporate bonds and mortgage-backed securities—returned minus 6% in 2022 through Wednesday, headed toward the biggest quarterly loss since 1980.

Wheat prices have climbed 31%, logging the best quarterly performance since 2010. The swings in nickel prices during the Ukraine crisis were so large that the London Metal Exchange closed trading in the commodity after a huge run-up in prices inflicted severe financial pressure on producers that sold nickel as a hedge.

“That’s not rational behavior for an instrument, and that’s terrifying,” said Paul Britton, founder of Capstone Investment Advisors, an investment firm specializing in trading volatility. He says he expects the turbulence to continue the rest of the year.

Adding to the pain for many investors was the decline among shares of big technology companies, the biggest market leaders of the past decade.

Facebook’s parent company, Meta Platforms Inc., lost about $232 billion in market value in a single session after posting disappointing earnings, the biggest loss in market value for a U.S. company in history. The next day, Amazon.com Inc. recorded the biggest-ever one-day gain in market value.

Meta had its worst quarter since its shares started trading publicly in 2012 and has been one of the biggest losers within the S&P 500. Other former market leaders also struggled. Netflix Inc. has lost 38% this quarter, its worst period since 2012. PayPal Holdings Inc. has also lost around 39%, its worst quarter on record, and Salesforce.com Inc. finished its worst quarter since 2011.

The S&P 500 outperformed the tech-heavy Nasdaq Composite by about 4.2 percentage points, the greatest margin since 2006, according to Dow Jones Market Data.

Other corners of the market have fared better. The S&P 500’s energy sector has soared 38% and notched its best quarter in history. Energy stocks like Occidental Petroleum Corp. and Halliburton Co. have skyrocketed more than 95% and 65%, respectively.

​Some optimism crept back into the market recently. After the Fed raised rates in March for the first time since 2018, a familiar pattern emerged. Investors piled back into stocks and stepped in to buy the dips in shares of tech and growth companies, as well as more speculative bets that had suffered to start the year.

Bitcoin prices have rebounded in March. Meme stocks like GameStop Corp. and AMC Entertainment Holdings Inc. have soared, gaining more than 30% for the month.

Some analysts said individual investors appeared to be piling back into the market, driving some of the gains, a move reminiscent of last year...

 

Americans More Worried About Energy Crisis U.S. Than Any Time in Last Ten Years

This is just such a visceral issue for people. As pollsters ask respondents, "If the presidential election were held today, for whom would you vote?"

Whoever it is, it wouldn't be no Democrats. Frankly, Biden should be primaried. If not, he should drop Kamala off the ticket --- and that's if the grumpy old man even runs for second term.

In any case, at Gallup, "Americans' Energy Worries Surge":

WASHINGTON, D.C. -- Americans are significantly more worried about the energy situation in the U.S. than they have been in a decade. Nearly half of Americans, 47%, say they worry a great deal about the availability and affordability of energy. This is up from 37% a year ago and is more than double the percentage in 2020, when energy concern was at its low point in Gallup's trend.

Americans have expressed similar levels of concern about energy in the past, including in 2001, 2006 through 2008, 2011 and 2012.

The March 1-18 poll was conducted as gasoline prices reached record highs in the U.S., averaging more than $4.00 per gallon nationwide. High gas prices have often been a factor in prior years when energy concern was high, including 2006 through 2008 and 2012.

In addition to the 47% who worry a great deal about energy, another 30% say they worry a fair amount, 17% only a little and 5% not at all.

The survey also finds 44% of U.S. adults describing the energy situation in the U.S. as "very serious," with 46% identifying it as "fairly serious" and 10% "not at all serious." A year ago, 32% said the energy situation was very serious.

Gallup first asked the question about the seriousness of the U.S. energy situation in 1977, during the 1970s energy crisis, and updated it frequently the rest of that decade. The current percentage describing the energy situation as very serious is similar to what it was in the late 1970s, as well as between 2006 and 2009.

The trend high point of 58% saying the energy situation was very serious came in May 2001, when energy prices were rising and the state of California issued rolling blackouts to deal with energy shortages there...

Click through at the link. Gallup also asked respondents to "consider the tradeoffs in protecting the environment and developing new energy supplies..."

Inflation, Shortages Push Americans to Switch Brands More Than Ever

I switched to Powerade from Gatorade, which is out of my price range now. 

Not only that, bottles now contain 28 ounces, down from at least 36. This is a longtime trend. When I was a kid my hands were too little to grasp those monster old bars of Safeguard. Now soap comes the size of a couple of Reese's.

And don't get me going about gas prices. I'm curtailing my driving, keeping it as local as possible for now. And I'm not poor, sheesh!

At WSJ, "Brand loyalty is tested as shoppers try new grocery products":

U.S. shoppers are buying what they can find—and afford.

Well-known brand names and flashy ad campaigns are no longer enough to command U.S. consumers’ loyalty in grocery stores, retail executives said. As inflation spreads and stretched supply chains leave gaps on shelves, shoppers are becoming increasingly fickle, with availability and price determining what goes into their shopping carts.

Shoppers’ new willingness to switch brands could shift the balances of power inside grocery stores. Big food companies like Kraft Heinz Co. and Kellogg Co. risk losing market share to competitors and store brands that are more readily able to fill in empty spots in store aisles, industry executives said. Supermarket operators, while grappling with shortages, said the situation is giving them more leverage with major brands and flexibility to test newer, often lower-cost products.

“We are seeing people make more choices on items because they are available,” said Tony Sarsam, chief executive officer of grocery chain SpartanNash Co. In the Grand Rapids, Mich.-based company’s supermarket aisles, Mr. Sarsam said, Tropicana orange juice lost share to Coca-Cola Co.’s Simply Orange in recent months, which has been easier for SpartanNash to stock, while Tyson Foods Inc. similarly lost share in frozen breaded chicken to Conagra Brands Inc.’s Banquet meals.

Mr. Sarsam said he and his team now are examining the variety of groceries the company sells, recently trimming the number of items it offers in cookie, cracker and salty snack sections in response to some brands’ inability to meet demand and slower sales. SpartanNash is sometimes giving more shelf space to local brands, which are better able to keep products in stock.

Tyson said it is working hard to meet high demand for its products. Coca-Cola, Conagra and private-equity firm PAI Partners, which owns Tropicana, declined to comment.

About 70% of U.S. shoppers said they had purchased a new or different brand than they had pre-pandemic, according to a survey conducted from May 2020 to August 2021 by private-label consulting company Daymon Worldwide Inc.

As consumers try less familiar names, brand loyalty for companies with supply challenges is declining, according to market research firm IRI. Brands with low availability, or in-stock rates of between 72% and 85%, have lost 0.7 percentage point of share of wallet on average, the firm said. Share of wallet, which measures brand loyalty, shows whether companies are gaining or losing buyers.

Consumers often stick to brands they know out of convenience and buy more items from names they are familiar with, industry analysts said. But shoppers are inclined to switch brands when belt-tightening if they can find a better deal. During the financial crisis, major brands across the grocery store developed lower-priced versions of their products to try to keep consumers loyal, as Procter & Gamble Co. did with cheaper versions of Tide detergent, Olay skin cream and Pampers diapers, for example.

Today, however, shoppers feel the pressure of higher prices while also facing shelves that are short on products, companies said. Those factors, in tandem, are driving more consumers to switch brands, executives said.

At 84.51 LLC, a data analysis business of supermarket giant Kroger Co., Vice President of Commercial Insights Barbara Connors said that brand switching was driven by extreme shortages and stockpiling, and that shoppers increasingly are switching to lower-cost brands including those on sale.

Production constraints are costing some food giants grocery-store turf. Kraft Heinz said in February it lost share in some supermarket categories as the company struggled to keep up with demand. Kraft Heinz had no additional comment.

Kellogg said in February that some of its cereal brands lost ground in supermarkets and that it expects to gain cereal market share in North America in the second half of the year when it can get more products back on shelves. Kellogg said that it gained market share last year in salty snacks and crackers.

“We will see market share restoration,” Steven Cahillane, chief executive of Kellogg, said on an earnings call last month. “We’re focusing first on our biggest brands.”

Some food companies said they see opportunities as more shoppers switch brands. Geoff Tanner, chief commercial and marketing officer at J.M. Smucker Co., said the maker of Jif peanut butter and Folgers coffee has benefited from being able to more consistently meet demand compared with competitors.

“There’s more to get if you can outperform,” Mr. Tanner said. About two-thirds of Smucker’s product portfolio is increasing its market share today compared with one-third before the pandemic, he said, and the company is boosting advertising...

 

The Runaway Cost of Virtue-Signalling

From Batya Ungar-Sargon, at Spiked, "Working-class Americans are paying a heavy price for their elites’ moral posturing":

As gasoline prices in the US continue to surge to an unprecedented $7 a gallon in some places, President Joe Biden seems more interested in finding someone to blame than mitigating the problem. ‘Make no mistake, inflation is largely the fault of [Russian president Vladimir] Putin’, the president said on Friday at the House Democratic Caucus Issues Conference. The president then cited a ‘fact checker’ in the New York Times and a Washington Post op-ed to counter anyone daring to lay the blame for skyrocketing prices at the feet of the president of the United States.

As gasoline prices in the US continue to surge to an unprecedented $7 a gallon in some places, President Joe Biden seems more interested in finding someone to blame than mitigating the problem. ‘Make no mistake, inflation is largely the fault of [Russian president Vladimir] Putin’, the president said on Friday at the House Democratic Caucus Issues Conference. The president then cited a ‘fact checker’ in the New York Times and a Washington Post op-ed to counter anyone daring to lay the blame for skyrocketing prices at the feet of the president of the United States.

I guess if you’re going to gaslight working-class Americans who have been struggling with historic levels of inflation for over a year now, it’s good to have legacy media outlets backing you up.

Of course, Biden is right that his decision to ban Russian oil and gas from the US market – a popular move, which 80 per cent of Americans approved of – has exacerbated these trends. But in trying to lay the blame of a year-long trend entirely at Putin’s feet because of a war that started three weeks ago, Biden is erasing the ongoing struggle American families have been facing, enlisting a foreign foe to cover for his domestic failures.

And it’s the very people the Democratic Party claims to care about who are suffering the most as a result of those failures. A new Wall Street Journal poll found that 35 per cent of black, Hispanic and Asian-American voters were feeling the sting of inflation, compared to just 28 per cent of white voters. Among black women and Hispanic men, the proportion was even higher, at 44 per cent. And of course, for those making less than $60,000, it was the worst, with half feeling the pain of inflation – compared to just 13 per cent of those making over $150,000.

It’s perhaps no surprise that it’s those whose incomes protect them from the sting of inflation who are most vocal about how willing they are to pay more for petrol – lecturing those who can least afford it about the importance of doing so on moral grounds...

Keep reading.