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- Oil timeline tightens, dishwasher market raises eyebrows
- A chart made of french fries
- The hidden connection between ExxonMobil and Bon Jovi
- Kyla Scanlon (!) on stagflation
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Seeing a vintage ’70s vehicle like this El Camino is a delight. Seeing a vintage ’70s convergence of declining growth and rising prices would be less so. (Image via Getty and Wealthfront.) |
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| Three numbers that explain the economic moment |
| 16 |
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Days left until energy prices reach a “tipping point” and begin shooting upwards, per traders and analysts who told the Financial Times that international stocks of oil and related fuels will reach critically low levels by June if the Strait of Hormuz remains closed. (Negotiations between the US and Iran are currently at an impasse.) Despite efforts to curb demand with renewables and rationing, national oil reserves across the globe are being drained, by one estimate, at the fastest rate in history.
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| 28.4% |
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That’s the amount by which Whirlpool’s share value fell in the week following the home-appliance manufacturer’s May 6 announcement of a “recession-level industry decline” in purchases of laundry machines, dishwashers, and the like. Strong consumer spending numbers have helped keep stock valuations for many firms high during the Gulf crisis, but companies that rely on middle-income households—others include Shake Shack, Target, and Planet Fitness—are starting to disclose sales slumps. Tuesday’s Consumer Price Index report also found inflation at its highest rate in 3 years, which probably won’t inspire the average US shopper to spend more, unless maybe it’s this person. |
| $38.4 billion |
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The profit Samsung Electronics reported for the first quarter of this year, a record-breaking amount that the South Korean tech behemoth attributes in part to sales of memory chips used by AI applications. Growth in the AI sector has been the other pillar of support keeping markets up since the Iran conflict began—and for now, at least, it’s continuing apace. (Information in this newsletter is accurate as of the time of publication but is subject to change. We would also note that trying to predict market downturns on the basis of washing machine sales or any other indicator has almost always been a harmful practice in the long run for the typical investor.) |
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| What activist investors worry about |
Image by Wealthfront
The premise of many private equity firms and “activist” funds is that outside observers can “unlock value” by recommending (or demanding) changes to a given company’s operations. Here’s an example of how that works in practice—data cited by the activist firm Starboard Value in a March letter to “frozen potato & fries” specialist Lamb Weston arguing that the latter’s level of overhead spending is too high relative to its competitors’. (Starboard Value’s version of the chart, for the record, did not involve ketchup. Idaho-based Lamb Weston, whose motto is “Possibilities in Potatoes,” reported better-than-expected earnings in April.)
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| Which of these nondescript New Jersey buildings is the legal headquarters of the ExxonMobil corporation for at least another 12 days? |
Bristol Myers Squibb headquarters via Coolceasar/Wikipedia. Others via Wealthfront.
Answer: The one in the upper right (830 Bear Tavern Rd. in West Trenton). The energy giant’s actual operations have largely been run from a campus near Houston since 1989, but it remains legally registered at an office park in New Jersey for reasons that date back to the Standard Oil era. On May 27, though, its shareholders will vote on formally moving to Texas to take advantage of what company leaders say is a more amenable present-day regulatory environment.
The other structures, clockwise from upper left, are Bristol Myers Squibb’s headquarters near Princeton University, a building next to the restaurant where the editor of Vested Interest sometimes picks up pizza, and the hospital where Bon Jovi was born.
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| Kyla Scanlon on what to take away from ’70s “stagflation” parallels—and what not to worry about |
We’re quite pleased to be introducing a new three-part video series on timely financial topics featuring bestselling author and commentator Kyla Scanlon, whose work we’ve followed and admired for some time. (See here for her Substack and here for her TikTok channel.)
In this first video, Kyla talks stagflation—the bad-news 1970s situation in which companies’ and workers’ earnings stayed flat (stagnation) even as prices got higher and higher (inflation). It was triggered by high energy costs and war in the Middle East, and hey, does that remind you of any particular set of commodity prices and geopolitical circumstances in the world right now?
Click through above for her thoughts on why the comparison might be a little premature—and what we can still learn from the psychedelic journey taken by the ’70s economy even if it is. Write us at askwealthfront@wealthfront.com to suggest other topics you’d like Kyla to cover!
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Last week we invited readers to answer the following question: What expense were you most surprised by when you started living and working on your own? The clear consensus: Insurance, of all kinds.
As Tyler from Austin, Texas put it: “Car insurance and home/rental insurance are two things that you can’t really do without. However, no one explains the different options, what they mean, what the costs are, how best to get a deal, what is a fair deal. All of this we have to find out on our own and kind of through trial and error.”
We also enjoyed this from Marcus, who’s also from Austin: “Renter's insurance—I didn't know I'd need it, and honestly I'm still not totally sure it's worth it, but almost every place requires it.” And we’ve started planning an insurance issue of Vested Interest. Get excited (to learn more about insurance)!
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| Wealthfront Corporation, 261 Hamilton Ave. Palo Alto, California, 94301, US
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The content provided in this newsletter is for informational and educational purposes only and does not constitute investment advice or a recommendation of any particular security, strategy, or account type. Views expressed are as of the issue date, based on the information available at that time, and may change based on market or other conditions. The content does not purport to be a complete description of the securities, markets, or developments referenced herein. The information has been obtained from sources considered to be reliable, but we do not guarantee its accuracy or completeness.
The Direct Deposit Plus Investing Program (“DDI Program”) from Wealthfront Advisers LLC and Wealthfront Brokerage LLC (collectively, “Wealthfront)” provides eligible clients a 0.25% annual percentage yield (“APY”) increase above the current base APY (paid by Program Banks) on total eligible Cash Account balances. Wealthfront may change or end the program at any time and determines eligibility at its discretion. See Terms and Conditions at http://wealthfront.com/promo-terms.
The video content was created in partnership with Kyla Scanlon, an independent content creator. The views expressed are their own and do not necessarily reflect those of Wealthfront Advisors LLC or its affiliates. The independent content creator and Wealthfront are not associated with one another and have no formal relationship outside of this arrangement. The linked video is for educational purposes only and is not financial advice or a recommendation.
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