Latest Inflation Numbers and Discussion

[Montecfo]

Isn't that a earnings chart?? We're talking profits. A company may have an impressive amount of earnings but have very little profit.

 

[JoeWras]

Don't worry about it. Someone found their stash and smoked it all. The stuff today is strong as hell.

 

[copyright1997reloaded]

Repeat after me:
“Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”
(Milton Friedman)

But I sense (as are others now) that this will be a useless discussion.

 

[CarbonaNotGlue]

The best video to explain inflation

 

[audreyh1]

Isn't that a earnings chart?? We're talking profits. A company may have an impressive amount of earnings but have very little profit.

Don't worry about it. Someone found their stash and smoked it all. The stuff today is strong as hell.

It’s simply a misunderstanding that reported earnings = profits.

Revenue is the term for money coming into the corporation.

https://www.investopedia.com/ask/answers/070715/what-difference-between-earnings-and-revenue.asp

 

[MichaelB]

It’s simply a misunderstanding that reported earnings = profits.

Revenue is the term for money coming into the corporation.

https://www.investopedia.com/ask/answers/070715/what-difference-between-earnings-and-revenue.asp

Thank you for the clarification

 

[MichaelB]

<mod note>
We can all disagree without being disagreeable. Let’s all please remember to keep a cordial and respectful tone.

 

[NW-Bound]

It’s simply a misunderstanding that reported earnings = profits.

Revenue is the term for money coming into the corporation.

https://www.investopedia.com/ask/answers/070715/what-difference-between-earnings-and-revenue.asp

From the above link (I added the bold face):

Revenue is the income a company generates before deducting expenses.

Earnings, on the other hand, represents the profit a company has earned; it is calculated by subtracting expenses, interest, and taxes from revenue.

 

[explanade]

High inflation hurts businesses. We can just look at the past to know. Poor profits, poor growth prospects. And that's why the stock market did not do well in these periods. Misery galore.

Some people may see oil companies making big bucks and think other businesses also do. But Exxon Mobil lost $22.4 billion in 2020 when COVID broke out, and nobody cried for them. BP lost $20.3 billion. Shell lost $21.7B. Numerous other smaller energy companies all lost mucho money.

I am no advocate of oil companies, but we still need oil, and these companies have to make money in order to continue their operation.

Profits are way up, with higher margins.

https://www.bloomberg.com/news/arti...fits-soar-taking-margins-to-widest-since-1950

I heard elsewhere that corporate profits as a percentage of GDP were the highest, as of the first half of this year, since the wartime economies of the 1940s.

 

[explanade]

People complain about petroleum company profits but US tech companies make far more, followed by banks. This article by Yahoo finance shows only 1 petroleum company in the top 10 for last year https://www.yahoo.com/video/apple-most-profitable-company-fortune-180540279.html#:~:text=Tech

The profits of Apple, Google and Microsoft probably exceed the entire petroleum industry, and definitely had a far lower tax rate.

What about 2022, when oil prices are way up?

Or look back at the 2008 period, when all-time oil prices were hit?


EU is talking about some kind of excess profits surtax to help fund winter energy costs.

 

[Montecfo]

EU is talking about some kind of excess profits surtax to help fund winter energy costs.

That would be counter-productive.

If you tax something you get less of it. Higher taxes drive higher prices in most cases.

 

[Beststash]

Don't worry about it. Someone found their stash and smoked it all. The stuff today is strong as hell.

Sorry about the misunderstanding - I learned something today.

This is what I have always thought....If you had $1,000 in sales for the week and the cost of goods sold (actual product cost) was $600 then the EARNINGS would be $400. but after subtracting his office expenses, vehicle costs, and what I would call overhead costs ($200) that number would be reduced to maybe $200 which I would call PROFIT.

So according to y'all - the Earnings reported by the megacorp is PROFIT? Do I have that right?

Anyway - it's pretty clear that no one here seems to believe that Corporate Profit over the last few years is major factor for our present inflation. I think they will "milk the inflation cow" for as long as they can get away with it and why would they not?

BTW - I did smoke a little yesterday but it was what we used to call "dirt weed". Texas doesn't think it's citizens are responsible enough to deal with Marijuana - instead recommend people just get ****-faced drunk.

 

[JoeWras]

Thanks for the humor, and I sincerely apologize for the stupid reply. You have a better sense of humor then me! Really.

 

[audreyh1]

So according to y'all - the Earnings reported by the megacorp is PROFIT? Do I have that right?

That investopedia link I posted spells it out clearly. Investopedia is a well respected investor education site. In particular it gives clear definitions for financial terms.

 

[NW-Bound]

Profits are way up, with higher margins.

https://www.bloomberg.com/news/arti...fits-soar-taking-margins-to-widest-since-1950

I heard elsewhere that corporate profits as a percentage of GDP were the highest, as of the first half of this year, since the wartime economies of the 1940s.

OK. We will have to wait to see how long that lasts.

The market bets "not for long". Hence, the stock market has been going down.

 

[explanade]

OK. We will have to wait to see how long that lasts.

The market bets "not for long". Hence, the stock market has been going down.

UPS reported this morning, beat profit expectations.

Their package volume was down over the year ago quarter but profits are higher because they raised prices.

It wasn't just covering higher fuel or labor costs, prices apparently increased margins.

 

[Koolau]

On a personal level this is the 2nd year in a row where my COLA-lite pension will not keep up inflation. The COLA is capped quite a bit below last year's and this year's inflation rate. Yes, I realize that's still better than no pension or a non-COLA'd pension. I estimate my pension has been reduced by about 8% in real terms over the last two years. I add this only to accentuate that inflation is a direct threat to our financial well being.

Thankfully, I never bought one of those fixed annuities that some of my peers bought when they retired. There was a big push to get teachers to use funds from an optional delayed compensation plan to do just that. Not so good, IMO.

I find myself envying your situation My pension's COLA is so "lite" that it's like helium. I haven't calculated what my pension has lost in 17 years. I guess I just don't want to know. Ironically, my old megacorp stock, which theoretically I should probably have gotten rid of when I FIRE'd has made up any difference. Even with the down turn, it is the gift that keeps on giving. Thank you megacorp!

 

[Koolau]

Companies can raise prices without regard to what it costs to make the product. That is how they make money in inflationary periods.

Sure they can. But I was making note of the SPECIFIC example. And call it sugar or corn syrup...makes no matter to me and is irrelevant they both cost more to produce and procure.

Both are true. What folks forget is that BEFORE the latest batch of inflation, production costs were inching up, supplier prices were going up to manufacturers, etc., but retailers, for the most part, attempted to hold the line on pricing. They are aware of what consumers do when prices rise - they cut back. SO, for quite some time, prices were being kept (for the most part) artificially low. Once the dam burst, all that pent up cost was suddenly passed to the consumer (along with some built in make-up profit) and here we are.

 

[Koolau]

Raise the minimum tax on their foreign earnings which would reduce a corporation’s incentives to shift profits and jobs abroad



Big corporations can use their dominant market power to jack up prices by hiding under the cover of inflation. It excites them to the point of convulsions. Small businesses can’t set prices the way big companies can. They have to sort of swallow most those costs.


Sure it can but I prefer they make some sacrifices and take as good care of their consumers as they do for shareholders. The sooner these interest rate increases stop the less pain for the consumer.

What you forget is that, while gummints are much more powerful than BigCompanies (after all, they have guns,) they are stupid by comparison to Big Companies. BigCompanies eat gummint regs, taxes, and laws for breakfast and spit out more profits in the process. Gummints love to show off by passing tough sounding rules and regs, and BigCompanies unleash their seasoned lawyers and find a way to make the changes profitable.

Regarding "excess profits" taxes. I laugh, looking back at the oil industry of the late 70s. They were rolling in profits - and sure enough the watch word of the day was "excess profits." By the time any gummint got round to an excess-profits discussion, it was the early 80s and the billboard signs were going up in Houston saying "LAST ONE OUT - TURN OFF THE LIGHTS!"

People forget that most of the companies with the "obscene" profits today were the companies hanging on by their fingernails a few years back (and a few years in the future.)

Here's the other thing I always add when I hear someone talk about "excess" or "obscene" profits. DO YOU OWN THEIR STOCK? If you don't, you don't really believe the rhetoric you are presenting. If some Big Company has price power and the gummint can't touch 'em, their stock should be gold! I'd be all over that. Unfortunately, today's high flier is tomorrow's also ran.

I've said it before and I'll probably have to say it again. IF a gummint wanted to lower (let's say gasoline) prices TOMORROW, they would simply announce that they would, as of today, make helping oil companies in any way they could to lower their costs of production and raise the levels of production their TOP priority. Examples might be. Open up all Fed lands to exploration, drop any up-front charges to do so (pay when you hit your gusher, Exon), drop most environmental regulations requiring years in court, Keystone is back on and we won't ever stop it without 2/3 vote of both house and senate. The price of oil would drop the next day and all those "extra, obscene" profits would dry up. Can you say Ironic?

 

[Beststash]

What you forget is that, while gummints are much more powerful than BigCompanies (after all, they have guns,) they are stupid by comparison to Big Companies. BigCompanies eat gummint regs, taxes, and laws for breakfast and spit out more profits in the process. Gummints love to show off by passing tough sounding rules and regs, and BigCompanies unleash their seasoned lawyers and find a way to make the changes profitable.

Regarding "excess profits" taxes. I laugh, looking back at the oil industry of the late 70s. They were rolling in profits - and sure enough the watch word of the day was "excess profits." By the time any gummint got round to an excess-profits discussion, it was the early 80s and the billboard signs were going up in Houston saying "LAST ONE OUT - TURN OFF THE LIGHTS!"

People forget that most of the companies with the "obscene" profits today were the companies hanging on by their fingernails a few years back (and a few years in the future.)

Here's the other thing I always add when I hear someone talk about "excess" or "obscene" profits. DO YOU OWN THEIR STOCK? If you don't, you don't really believe the rhetoric you are presenting. If some Big Company has price power and the gummint can't touch 'em, their stock should be gold! I'd be all over that. Unfortunately, today's high flier is tomorrow's also ran.

I've said it before and I'll probably have to say it again. IF a gummint wanted to lower (let's say gasoline) prices TOMORROW, they would simply announce that they would, as of today, make helping oil companies in any way they could to lower their costs of production and raise the levels of production their TOP priority. Examples might be. Open up all Fed lands to exploration, drop any up-front charges to do so (pay when you hit your gusher, Exon), drop most environmental regulations requiring years in court, Keystone is back on and we won't ever stop it without 2/3 vote of both house and senate. The price of oil would drop the next day and all those "extra, obscene" profits would dry up. Can you say Ironic?

I do remember the oil bust in the 80's (I think the middle to late 80's)- I lived in Houston at the time and I remember folks saying you could buy a home for the price of an automobile. There were so many jobs lost and it affected a lot of people in the banking business as well. The fossil fuel industry seems to be in a perpetual boom/bust cycle. It provides a huge number of jobs in Texas and I don't know the figures but probably is the major industry for the state (although technology has really helped diversify the revenue and jobs market these days).

I know the fossil fuel industry is a necessary evil but it is a "dirty business" in terms of business ethics, production, transportation, and environment. The risk/reward nature of the business leads to lying, cheating, dishonesty, and the poster child of a "good old boys club". For those reasons and also the geopolitical issues that are directly tied to it, I am all for alternative energy sources as soon as possible. I know fossil fuels will always be necessary to a certain extent but to me the less we depend on them the better.

Do I own fossil fuel stocks? I did until the Deepwater Horizon oil spill and then decided I would no longer contribute to the stench. These days I live in Central Texas and the smell of rotten eggs is not uncommon, especially on cool mornings, and it is attributable to the "Luling effect" which comes from the oil fields around Luling, Tx. So much for living in the country and fresh air!

I can see you don't like "gummint" regulation but in Texas that is a joke. The Texas Railroad Commission and the TCEQ (Texas Commission on Environmental Quality) a charged with regulation of oil and gas activities and they have turned their heads for decades to all kinds of violations.

It's obvious to me that the present situation we have with gas prices goes back to the fossil fuel companies manipulation of prices to pad their profits and of course the ever present geopolitical issues that have plagued us for decades. They like to blame not enough drilling, too many regulations, and too much focus on climate change but in reality it our dependence on fossil fuels, instead of moving more quickly to less volatile commodities such as sun and wind.

That's my opinion and I'm sticking to it. ☮

 

[Koolau]

I do remember the oil bust in the 80's (I think the middle to late 80's)- I lived in Houston at the time and I remember folks saying you could buy a home for the price of an automobile. There were so many jobs lost and it affected a lot of people in the banking business as well. The fossil fuel industry seems to be in a perpetual boom/bust cycle. It provides a huge number of jobs in Texas and I don't know the figures but probably is the major industry for the state (although technology has really helped diversify the revenue and jobs market these days).

I know the fossil fuel industry is a necessary evil but it is a "dirty business" in terms of business ethics, production, transportation, and environment. The risk/reward nature of the business leads to lying, cheating, dishonesty, and the poster child of a "good old boys club". For those reasons and also the geopolitical issues that are directly tied to it, I am all for alternative energy sources as soon as possible. I know fossil fuels will always be necessary to a certain extent but to me the less we depend on them the better.

Do I own fossil fuel stocks? I did until the Deepwater Horizon oil spill and then decided I would no longer contribute to the stench. These days I live in Central Texas and the smell of rotten eggs is not uncommon, especially on cool mornings, and it is attributable to the "Luling effect" which comes from the oil fields around Luling, Tx. So much for living in the country and fresh air!

I can see you don't like "gummint" regulation but in Texas that is a joke. The Texas Railroad Commission and the TCEQ (Texas Commission on Environmental Quality) a charged with regulation of oil and gas activities and they have turned their heads for decades to all kinds of violations.

It's obvious to me that the present situation we have with gas prices goes back to the fossil fuel companies manipulation of prices to pad their profits and of course the ever present geopolitical issues that have plagued us for decades. They like to blame not enough drilling, too many regulations, and too much focus on climate change but in reality it our dependence on fossil fuels, instead of moving more quickly to less volatile commodities such as sun and wind.

That's my opinion and I'm sticking to it. ☮

You are, of course, welcome to your opinion. Opinions are like, well, you know - noses and everyone has one. You suggested I don't like gummint regs. I look at gummint regs as a necessary evil - just as oil&gas is a necessary evil. What I wish is that gummint and O&G would cooperate to give consumers the lowest possible prices with the least amount of environmental damage. As long as the relationship between the two is adversarial and antagonistic, the cost of regs will be the highest and the results will be the least effective. Believe it or not, all companies (whether O&G or steel mfgs, or paper mills or Ben & Jerry's) know much more about how to operate cleanly than the gummint does. If cooperation were more important to the two sides than "winning" results would be a lot cheaper and more effective.

That's MY nose (er, I mean, opinion.) YMMV

 

[Beststash]

If cooperation were more important to the two sides than "winning" results would be a lot cheaper and more effective.

Agree completely!!

 

[kcowan]

Fossil fuels will be with us for the foreseeable future. It is too bad that wind and solar have not measured up. Nuclear and hydro seem to be the only viable alternatives. Both have severe ecological impacts.

At least we are avoiding coal unlike China.

 

[youbet]

We can argue until the cows come home about the cause of inflation but we can't lose sight of the basic point that it is outrageous that corporations are seeing huge profits while purchasing power for so many American households is declining.

Good point BS.

In the 80's all corporations cut profits deeply and voluntarily. CEO's gave up their corner offices and company cars. Salespeople gave up their commissions. Engineers worked many, many extra hours and declined any pay increases. Etc, etc. This is all well documented. I've attached just one example.

 

[Koolau]

Good point BS.

In the 80's all corporations cut profits deeply and voluntarily. CEO's gave up their corner offices and company cars. Salespeople gave up their commissions. Engineers worked many, many extra hours and declined any pay increases. Etc, etc. This is all well documented. I've attached just one example.

Heh, heh, you had me goin' there.

Here's a couple of examples I can add to the discussion.