INFLATION IS REAL AND RAMPANT.
THE ONLY ISSUE IS HOW LONG THAT
IS THE CASE.
IT HAS GONE WAY PAST THE
INTRANSIGENT, THE FORMER CEO IS
WITH US.
BILL, YOU REPORTED EARNINGS
EARLY IN THE WEEK AND SAYING
THIS IS THE WIND AT THEIR BACK,
THEY ARE ABLE TO PASS ALONG THE
HIGHER PRICES BUT WITH THE
CAUTION THAT THEY CAN STILL DO
SO.
HOW LONG DO YOU SUSPECT THAT
LASTS?
>> IT IS TRANSITORY, DON’T YOU
LISTEN?
I HEARD JANET YELLEN DOUBLE DOWN, TRANSITORY IS NOT A
DOWN, TRANSITORY IS NOT A
COUPLE MONTHS BUT PROBABLY
STILL THE RIGHT WORD TO USE.
MY OWN PERSPECTIVE IS WE ARE AT
AN INFECTION POINT FOR 2022.
THERE ARE A LOT OF PRICE
INCREASES STILL TO COME
PARTICULARLY IN THE CONSUMER
PRODUCTS AREA.
I AM CHAIRMAN OF A COMPANY THAT
WENT PUBLIC IN THE LAST COUPLE
WEEKS, COMPLETED TWO WEEKS OF
BOARD MEETINGS AT THE TROPIC
FOR EACH DAY WAS INFLATION.
SUPPLY-CHAIN ISSUES ARE NOT GOING AWAY NO MATTER WHAT
GOING AWAY NO MATTER WHAT
ANYONE IS TELLING YOU.
YOU’VE GOT SIGNIFICANT LABOR
ISSUES THAT AFFECT THE LABOR
PARTICIPATION RATE HAS DECLINED
AT THE LEVEL IT HAS AND WE ARE
HAVING LABOR ISSUES AND PEOPLE
ARE HAVING TO PAY OFF FOR LABOR
AND ENERGY PRICES ARE UP AND WE
HAVE TO IMPORT MORE OIL.
NONE OF THIS WILL GO AWAY
SHORT-TERM AND IT ASTOUNDS ME.
I WAS IN 2 ECONOMISTS.
I HAVE MORE FAITH IN WHETHER
PEOPLE THAN I DO IN ECONOMISTS.
NEIL: WE HAVE AN APPS FOR THAT.
BEFORE I DIGRESS, JANET YELLEN
SAID SPENDING BILLS BEING
DEBATED RIGHT NOW WILL BE
ANTI-DEFLATIONARY.
THEY WILL LOWER KEY COSTS.
WHAT DID YOU THINK OF THAT?
>> I USED TO READ DR. SEUSS TO
MY KIDS AND GRANDKIDS AND WE
ARE IN DR. SEUSSLAND. THE LATER, THE BIGGEST COUNTRY,
THE LATER, THE BIGGEST COUNTRY,
THE FREEST COUNTRY IN THE WORLD
THROWS AROUND THE WORD FREE
WHICH IS THE MOST POWERFUL WORD
IN MARKETING AND APPARENTLY THE MOST POWERFUL WORD IN POLITICS
MOST POWERFUL WORD IN POLITICS
AND IN SOCIALIST COUNTRIES I
GET VERY CONCERNED.
THERE IS NO WAY, I DON’T CARE
WHAT ECONOMISTS ARE SAYING, NO
WAY THAT AS YOU INCREASE
SPENDING ON TOP OF $20 TRILLION
IN DEBT, WITH CURRENTLY LOW
INTEREST RATES WHICH ARE
EVENTUALLY GOING TO HAVE TO
MOVE THE IT IS NOT GOING TO BE
INFLATIONARY, BASIC ECONOMICS
DON’T MAKE SENSE.
ONE THING THAT IS ANNOYING TO
ME HIS WATCH THE BUSINESS
COMMUNITY FALL IN LINE WITH
THIS AND SAY IT WILL BE
TRANSITORY AND WE WORK THROUGH
IT.
I CAN TELL YOU THE WORST
PRICING IS YET TO COME
PARTICULARLY ON GROCERY SHELVES
AND I SUSPECT THE SAME IS TRUE
IN ENERGY.
THE TRICKLE-DOWN EFFECT WE USED
TO THINK WAS POSITIVE IN TERMS
OF ECONOMICS WILL BE A TRICKLE
UP AFFECT IN TERMS OF THE
IMPACT OF INFLATION AND
EVERYONE’S POCKETBOOK. LAUREN: A SLIGHTLY DIFFERENT
LAUREN: A SLIGHTLY DIFFERENT
TAKE ON THAT OWING TO THE
MARKET STRENGTH, SURPRISING
STRENGTH THROUGH ALL OF THIS,
THIS IDEA THAT PEOPLE ARE
PAYING HIGHER PRICES.
ONE THING YOU HEAR FROM
COMPANIES LIKE YOUR OWN, CRAFT
SAYING THIS IS HAPPENING,
PEOPLE ARE PAYING HIGHER
PRICES, MCDONALD’S PASSED ALONG
HIGHER PRICES, CHIP ONLY WILL PAY THEM AND INFLATION ENDS
PAY THEM AND INFLATION ENDS
WHEN PEOPLE STOP DOING THAT.
THEY ARE NOT STOPPING DOING
THAT.
WHAT DOES THAT TELL YOU?
>> A COUPLE THINGS AT WORK
HERE.
ONE OF THEM IS IMPORTANT THAT
PEOPLE ARE OVERLOOKING AND THAT
IS FIRST TIME IN THREE OR FOUR
DECADES, THE CONSUMER INDUSTRY
HAS PRICE LEVERAGE.
WE HAVEN’T HAD IN A LONG TIME.
PRICE INCREASES WERE LIKE
PULLING TEETH IN TERMS OF
GETTING THROUGH RETAILERS BUT
THE RETAILERS ARE FEELING THE
PAIN WE ARE AS WELL SO GETTING
PRICE INCREASES THROUGH HAS BEEN PRETTY GOOD.
BEEN PRETTY GOOD.
CONSUMERS UP TO A POINT
PARTICULARLY DURING THE
HOLIDAYS WILL SPEND WHAT IS
REQUIRED, AND BY THE PRODUCTS
THEY ARE INTERESTED IN.
THAT WILL END.
PRIVATE-LABEL COMEBACK A
PRIVATE BRANDING WILL COME BACK
IN A BIG WAY, THE RETAILER WILL
GET TIRED OF ACCEPTING PRICE
INCREASES BECAUSE THEY TAKE THE
BRUNT OF CONSUMER ACCUSATIONS
OF PRICING UP SO THIS WILL LAST FOR A WHILE IN THE INDUSTRY
FOR A WHILE IN THE INDUSTRY
ITSELF WILL PASS THIS ON BUT IF
YOU LOOK AT MOST OF THE
REPORTS, MARGINS ARE
CONTRACTING AND ULTIMATELY
THOSE MARGINS CONTRACT MEANS
OTHER THINGS ARE GOING TO HAVE
TO CONTRACT AS WELL WHETHER IT
IS THE WORKFORCE, SUPPLY,
NUMBER OF SKUs ON THE SHELF.
I HEAR EVERYONE OUT THERE
PREACHING THE GOSPEL OF
OPTIMISM BUT I HAVE JUST BEEN
THROUGH THIS TOO MANY TIMES TO
NOT BE CONCERNED.
THAT IS WHY I SAID THIS IS AN
INFECTION POINT, MY OWN VIEW IS
I DON’T THINK WE HAVE SEEN THE
WORST.
I DO THINK ULTIMATELY WE WILL
SEE SOME CONSUMER PUSHBACK AND
IF WE CAN’T ALL THESE LABOR
PROBLEMS OVER THE NEXT 6 TO 9
MONTH I DON’T THINK THE
SUPPLY-CHAIN ISSUES WILL GO
AWAY EITHER.
NEIL: STARBUCKS WANTS TO RAISE
RATES TO $17 AN HOUR.
STARBUCKS IS UNDER SOME
PRESSURE TODAY ON THAT NEWS.
YOU HAVE TO SELL A LOT OF
COFFEE.
THAT IS AN EXPENSIVE PLACE FOR
COFFEE, COST $100 A CUP BUT THAT ASIDE YOU HAVE TO SELL A
THAT ASIDE YOU HAVE TO SELL A
LOT OF COFFEE TO PAY FOR THAT.
>> YOU ARE GOING TO HAVE TO
SELL A LOT OF COFFEE AND SAME
ACROSS THE BOARD.
I CHUCKLE WHEN PEOPLE TALK
ABOUT $15 MINIMUM WAGE.
INDUSTRIES WOULD LOVE TO GET
AWAY WITH A $15 MINIMUM WAGE.
REALITY IS WE HAVE A HOME IN
JACKSON HOLE, WALK DOWN THE
STREETS TO ANY OF THESE PLACES
AND THERE ARE HELP WANTED SIGNS
EVERYWHERE, PEOPLE ARE
DESPERATE FOR EMPLOYEES.
THAT WILL HAVE AN IMPACT ON
BUSINESS AT ITS SUCCESS.
IT WILL HAVE TO BE PASSED ON SO
INFLATION WILL CONTINUE FOR A
WHILE BUT ULTIMATELY PEOPLE DO
GET TIRED OF IT AND THERE WILL
BE A REACTION.
I’M OLD ENOUGH, YOU ARE NOT, TO
REMEMBER THE 70s WHEN THIS
TURNED INTO STAGFLATION, 2% GDP
GROWTH WAS NOT ENCOURAGING TO
ME.
I DO THINK IT IS A ONE UP BUT
IF THAT WERE TO STAY ALONG THIS
INFLATION WE BRING BACK THE OLD
MISERY INDEX AND THE OLD TERMS
OF STAGFLATION AND THAT WILL BE
A REAL ISSUE TO ADDRESS.
NEIL: IF YOU ARE IN NAPLES A
LOT OF THE TIME THEY DON’T MIND
THE PRICE INCREASES.
THEY CAN HANDLE IT.
>> WOULD YOU TELL THAT TO MY
WIFE OF 48 YEARS?
AS I SAID IF EVERY ECONOMIST IN
THE COUNTRY WERE REQUIRED TO
WALK DOWN GROCERY AISLES OR
THROUGH DEPARTMENT STORES, GO
AND BUY A CUP OF COFFEE INSTEAD
OF SENDING SOMEONE TO GET A LOT
OF THIS MIGHT GO AWAY OVER TIME
IN THE WORD TRANSITORY WOULD BE
SHELVED QUICKLY.
EVERY TIME I HEAR THAT WORD I