Stocks Close Near Record Highs

Dow: -0.09% | Nasdaq: +0.31% | S&P: +0.02%

Catch Up Quick

• Manchester United will allow fans to buy shares in club

• Katerra, a construction tech startup with ~$2B in funding from firms such as SoftBank, has filed for Chapter 11 bankruptcy protection

• Clear Secure, the biometric identity company known for its airport security lines, filed for an IPO

• Chipotle Mexican Grill ($CMG) raised menu prices by ~4% to cover the costs of rising wages

• United Airlines will require employees to show proof of vaccination

• The FDA approved the first Alzheimer's drug in nearly 20 years

• Wendy’s shares ($WEN) surge ~25% to record highs after a post in Reddit’s WallStreetBets forum declared it “the perfect stock”

• The Chernin Group (TCG), an investment firm specializing in media + tech consumer brands, is raising $1B

• El Salvador may recognize bitcoin as a legal tender

• Cruise, GM’s autonomous vehicle arm, is approved to shuttle California passengers in with no operator behind the wheel

• The Nigerian government has banned Twitter

• A group of private-equity firms will acquire Medline Industries for $30B

Thought of the Day

• In light of pandemic-induced government spending, the NY Fed found inflation expectations to have reached levels unseen in over a decade

• This sentiment reflects surging prices of lumber, iron, copper, corn, soybeans, wheat, and oil, among others

• Many prominent high-finance figures, such as Ray Dalio, Bill Ackman, Michael Burry and Warren Buffet, have all have been outspoken about fears of inflation (or even hyperinflation)

• Surprisingly, the Fed is swimming upstream with an opposing stance, arguing that recent price rises are merely “transitory” and temporary, as economic reopening pressures supply chains 

• Some recent price appreciation indeed appears attributable to an acute demand spike disrupting supply chains that were idle due to pandemic shortages 

• In parallel with this narrative, market forces will balance in the short-term and fully recovered supply chains should pull prices back to earth

• However, employers such as McDonalds, Target, BestBuy, Starbucks, and Costco (among others) have recently increased wages, which unlike supply shortage price hikes, are usually less temporary

The Bottom Lines

• While titans of industry & The Federal Reserve have differing takes on inflation, pay close attention to raw material prices (if they begin to normalize or not)

• If not, The Fed will be forced to choose between letting inflation run or raising rates, both of which could send record high stock prices into a spiral