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Thursday, September 16, 2021
Apple’s hardware isn’t getting more expensive, but “you can’t eat an iPad”
Amidst a lot of loudness, the latest iteration of iPhone arrived this week, with more than a few rumors about Apple’s lack of product innovation (AAPL). But at least one aspect gave consumers a reason to celebrate.
CNBC’s Jon Fortt astutely noted that the House Steve Jobs built chose to keep prices at the levels of the iPhone 12, which made the iPhone “inflation-proof.” Fortt assumed that a combination of short-term sacrifice, subsidies to the company and first-rate engineering from Apple has allowed consumers an unusual and unexpected price reduction for upgrading their phones.
The relative price of the iPhone 13 reminds us that until the COVID-19 came into the world, technological advances played a huge role in increasing productivity and taming inflation. Whatever the reason for Tim Cook’s CEO, Apple is challenging a particularly nasty problem that is strangling consumers: prices everywhere are rising, with no predictable end.
All of this leads us to a problem that hardly gets the attention it deserves. Nowhere has inflation had a greater impact, though mostly less on the radar, than on what we eat.
Bloomberg highlighted the problem in a recent report citing United Nations data showing that food inflation soared 31% year-on-year in July. The story also reminded readers that the food riots caused by rising prices were a major driver of the 2011 Arab Spring protests (as if the world needed more civil unrest).
In addition, the August Consumer Price Index (CPI) revealed that annual food inflation fell by about 4% in recent months. According to DataTrek Research, food prices in the United States have risen 8% in the past two years, led by protein commodities such as meat, poultry, fish and eggs.
“While protein inflation is volatile, the usual pattern is a sudden rise … followed by a subsequent decline,” Nicholas Colas, co-founder of DataTrek Research, wrote on Wednesday. “We have had two increases in the recent past (2020, 2021), but there is still no decrease.”
The fact that the United States imports hundreds of billions of food each year is very complicated, much more than what it sends abroad (unfortunately, a story for another day). And in this area, prices are also rising: August import price data showed that food prices rose 0.6% month-on-month and 10% year-on-year.
At least part of this narrative is motivated by rising shipping costs, mainly attributed to high demand and global supply chain problems.
Estimating that world import prices rise 10% every time shipping costs double, Capital Mac Economics’ Simon MacAdam wrote on Wednesday: “The passthrough is hard to predict.”
The long-term impact on consumers is not entirely clear, but MacAdam noted that “if shipping costs were expected to fall soon, importers could be comfortable waiting for costs to normalize and stop rising prices “.
However, “following the charter rate futures for bulky ships, traders have finally understood the idea in the last two months that shipping costs will not fall on this side of Christmas and will remain well above the levels of pre-virus until 2022. ”The short version: don’t expect any relief in grocery aisles or restaurants just in case.
All this brings us back to the curious case of Apple, and a particularly relevant anecdote.
In 2011, then-President of the New York Federal Reserve, William Dudley, tried to reassure Queens consumers about rising food prices. The central banker cited the latest iPad which cost the same as the previous version as a reason to “look at the prices of all things”.
As you can imagine, the analogy went wrong with Dudley’s working-class audience. One of the attendees threw a memorable joke, “I can’t eat an iPad.”
A decade later, suffice it to say that iPads or iPhones yet they are not edible. Politicians would do well to remember this.
Per Javier E. David, editor a Yahoo Finance. Follow him on @Teflongeek
What to see today
Economy
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8:30 am ET: Retail sales advance, month to month, August (-0.7% expected, -1.1% in July)
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8:30 am ET: Retail sales without vehicles and gas, August (expected unchanged, -0.7% in July)
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8:30 am ET: Initial claims for unemployment, week ended September 11 (323,000, 310,000 were expected during the previous week)
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8:30 am ET: Continued claims, the week ended September 4 (2,740 million were expected, 2,783 million the previous week)
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8:30 am ET: Philadelphia Fed Business Outlook Index, September (19.0 expected, 19.4 in August)
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10:00 am ET: Business inventories, July (0.5% expected, 0.8% in June)
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16:00 ET: Total net ICT flows, July ($ 31.5 billion in June)
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16:00 ET: Net long-term ICT flows, July ($ 110.9 billion in June)
Earnings
Politics
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President Biden has a speech on economics at 1:45 pm ET. The White House promised to discuss efforts to “reduce costs and ensure that the country’s backbone, the middle class, can finally get a break.”
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Later Capitol Hill, lawmakers are largely out of a recess, but a fence around the Capitol is being reinstalled ahead of a Jan. 6 follow-up rally called “Justice for J6,” which is scheduled for this weekend. Fencing is expected to end tonight.
Highlights
Modern tries to join Pfizer to push the United States [Yahoo Finance]
Cathie Wood continues to sell Tesla, unloading $ 62 million in stock [Bloomberg]
The Treasury analyzes the risks of stable currencies and promotes new proposed rules [Yahoo Finance]
The first all-civilian crew launched into orbit aboard the SpaceX rocket [Reuters]
Highlights of Yahoo Finance
The key provisions for the $ 3.5 trillion conciliation bill retirement are detailed below.
When will Amazon’s shares skyrocket again?
Retailers do not buy the bathroom as usual: analysts
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