Inflation remains elevated… and more federal dollars to the economy are likely on the way… one altcoin that’s been surging recently Consumer prices remain high.The July numbers from the Labor Department came in yesterday.The Consumer Price Index (CPI) rose 5.4% compared to a year earlier.That matches June’s pace, which is the highest 12-month rate since 2008.Meanwhile, some news outlets are trumpeting the “less than expected” rise in core inflation of 4.3%.
But core inflation doesn’t include food and energy prices.
Did you go without eating last month? Did you car stay parked the entire 31 days? No? Then core inflation isn’t as relevant to your family’s budget.The latest news this morning is that the Producer Price Index (PPI) rose to 7.8% last month.
Forecasts called for 7.3%.The government continues to blame supply-chain bottlenecks for this inflation.So, it’s all transitory – after these bottlenecks resolve, prices will return normal.We don’t disagree that resolved bottlenecks will ease some pricing certain pressures, but as we’ve pointed out here in the Digest, this line of thinking ignores an important factor… The trillions of dollars of government stimulus money sloshing around the economy.Hold on to this – we’ll circle back in a moment.***Yesterday, The Wall Street Journal pointed out that one way to evaluate the scope of today’s consumer inflation is by monitoring rental rates That’s true – after all, rental costs make up about one-third of the CPI.So, what’s happening with rents? Well, they’re up.CoreLogic just found that single-family home rent prices are up 5.3% year-over-year.
And the Apartment List National Rent Report shows an increase of 11.4% in rental prices so far in 2021.The WSJ article profiled a Pennsylvania landlord who was surprised when tenants were willing to accept rental increases of more than 10%.From the WSJ: He was stunned when a bidding war broke out over a Columbia County, Pa., unit in May.“We advertised it at $725 thinking the economy’s not that strong out here.
Well, it got up to $950 – that’s when I stopped it,” said Mr.Tannenbaum, a managing principal at the Denali Cos., a workforce housing investment firm.On top of that, the winner was also willing to pay six months up front plus a security deposit before moving in.“I don’t know where these people are getting their money from…” I have an idea… And more money is likely on the way.***On Tuesday, the Senate passed the $1 trillion infrastructure bill… and yesterday, the Senate passed its $3.5 trillion budget blueprint along party lines As to what was in the infrastructure bill, here’s The New York Times: With $550 billion in new federal spending, the measure would provide $65 billion to expand high-speed internet access; $110 billion for roads, bridges and other projects; $25 billion for airports; and the most funding for Amtrak since the passenger rail service was founded in 1971.
This generally feels like traditional infrastructure spending – road, bridges, internet buildout… But what’s in the next $3.5 trillion proposed package is much more of a mainline injection of cash directly to people and social programs.From the WSJ: The legislation is expected to include paid family and medical leave, subsidized child care, an extension of an expanded child tax credit, universal prekindergarten for three- and four-year-olds and two years of tuition-free community college… It would also extend expanded Affordable Care Act subsidies approved earlier this year in the Covid-19 aid package.The plan would broaden Medicare benefits to cover dental, vision and hearing.
This is infrastructure? Regardless, the bottom-line takeaway is this would be another tidal wave of cash engulfing our already cash-soaked economy.So, what might this mean for the U.S.
dollar? Well, last month, we highlighted analysis from Jeff Gundlach of DoubleLine Capital, nicknamed “The Bond King.From Gundlach: Ultimately, the size of our deficits – both trade deficit, which has exploded post-pandemic, and the budget deficit, which is, obviously, completely off the charts – suggest that in the intermediate term – I don’t really think this year, exactly, but in the intermediate term – the dollar is going to fall pretty substantially, and that’s going to be a very important dynamic… In the short term, the dynamics have been and will continue to be in place for the dollar to be marginally or moderately stronger.In the longer term, I think the dollar [is] doomed.It’s hard to look at this latest $3.5 trillion spending proposal (on top of the trillions already spent) and not believe Gundlach has a point.That’s why we’ve been urging investors to move their wealth outside of the dollar into fundamentally superior stocks, gold, real estate, and elite cryptocurrencies.
On that last note, keep your eye on an altcoin in Luke Lango’s Ultimate Crypto portfolio that’s been making a strong move recently.***Yesterday, that altcoin, Cardano, pushed as high as 20% after its founder announced the network will enable smart contracts For newer Digest readers, Luke is one of our crypto specialists and the editor behind Ultimate Crypto.One of the altcoins held in the Ultimate Crypto portfolio is “Ada.” It’s from a decentralized, public blockchain platform called Cardano.Ada (which we’ll refer to as “Cardano” for ease) enables peer-to-peer transactions.Yesterday, the founder announced that this Friday is when he will specify the date of the upcoming hard fork.
Without getting too technical, a hard fork is basically a radical change to the way a blockchain network works, resulting in “the old way” and “the new way” – like a fork.After the hard fork, Cardano will enable smart contracts on its network – that is, transactions without an intermediary.Many investors believe this will give Cardano an advantage over Ethereum.The altcoin is down today as investors take profits after yesterday’s surge, but on the whole, Cardano’s returns have been extraordinary.
Investors who bought Cardano according to the original Ultimate Crypto recommendation in January 2020 are now up 4,632%.
That would have turned a $5,000 starting position into more than $230,000.Best of all, from a macro perspective, we’re still in the early days of widespread crypto adoption.And it’s likely that Cardano still has extraordinary gains in front of it – even from here.
One crypto analyst is calling for Cardano to climb to $5 in the wake of the Alonzo hard fork (it’s trading at $1.76 as I write).Congrats to Ultimate Crypto subscribers.Keep holding.***Finally, a fun “sign of the times” to take us out Regular Digest readers know we that believe self-driving cars – aka “autonomous vehicles” (AVs) – represent one of the biggest, most disruptive investment opportunities of the next 20 years.This innovation will transform huge portions of our economy and create trillion-dollar ripple effects.But as we’ve reported here in the Digest, this trend isn’t limited to cars.
For years now, companies have been working on autonomous air taxis.Yesterday, one of the sector leaders, Joby Aviation, went public under the ticker “JOBY.” From CNBC: The company aims to bring its electric vertical takeoff and landing aircraft, known in the industry as an eVTOL, into service in 2024.
The company brought one of its aircraft to park in front of the New York Stock Exchange on Wednesday to mark the occasion.According to the company, its eVTOL can transport four passengers and a pilot, flying up to 150 miles on a single charge with a cruising speed of 200 mph.Here’s Joby’s founder, JoeBen Bevirt, with his air taxi.And if you think this is cool, get this… Tech companies are working on supersonic passenger jets.
For example, in June, United Airlines Holdings (UAL) partnered with aerospace company Boom Supersonic.United will buy 15 of Boom’s “Overture” airliners.This gets it one step closer to supersonic speeds.
So, what does that mean? From United: Capable of flying at speeds of Mach 1.7 – twice the speed of today’s fastest airliners – Overture can connect more than 500 destinations in nearly half the time.
Among the many future potential routes for United are Newark to London in just three and a half hours, Newark to Frankfurt in four hours and San Francisco to Tokyo in just six hours.Imagine taking a 3.5-hour flight to Heathrow in London, followed by a short air taxi flight to your hotel… What a wonderful time to be alive.
Have a good evening, Jeff Remsburg.
