Bob Klein | Newport Beach

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on May 08, 2018

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April 30, 2021 Update | Bob Klein of Medici Capital

This week, corporate executives continued to belt out the warnings about the rising prices they are seeing. Proctor & Gamble CEO, Andre Schulten said the increase in commodity costs was one of the largest he had seen in his career, and he expected the pressure to grow. John Hartung, CFO of Chipotle, flagged rising labor costs as a potential risk to profit margins, and he predicted, “Everybody in the restaurant industry is going to have to pass those costs along to the consumer.” Whirlpool will raise prices 5-12% to offset what it expected to be a $1 billion hit this year from higher input costs. Honeywell commented on rising costs, “We knew it. We see it. It’s real.” Too bad that neither Fed’s Jay Powell nor anyone in the Biden administration can see it or realize its significance. B of A tracks what they call “mentions of inflation” on corporate earnings conference calls. They show that these mentions are up 300% over the past year, whic...

An Update on Gold | Bob Klein of Medici Capital

On July 24, 2020, gold hit a new all-time closing high in dollar terms, $1902, eclipsing the prior closing high in 2011. (Some time ago, it hit an all-time high in all other major currencies.) The catalyst this week was yet another $1 trillion stimulus package announced by the White House with an agreement in principle from Senate Republicans. Currency/gold traders know that the financially-strapped U.S. government will need to print another trillion dollars to pay for this new program. Given the money supply is approximately $5 trillion, $1 trillion in new dollars will cause a significant debasement of the dollar. Over the next year, I expect prices to rise on the things that we buy. As I’ve said in prior notes, the government is simply grabbing the wealth of dollar holders and doling it out to the government’s preferred recipients. The famed French thinker, Voltaire, captures the essence of this maneuver, “The art of government consists of tak...

An Update on the Markets | Bob Klein of Medici Capital

T he stock market is stumbling higher struggling with heavy new supply of stock from stock sales by insiders and from new stock offerings by companies. Executives are rushing to sell to take advantage of the very elevated valuations. Sales of stock by insiders has never been higher, except for the period just before the dotcom/tech bubble burst. In time, as scientists win the battle against the virus, the pandemic will go away, but the debt incurred during the crisis will not. Businesses and the U.S. government are borrowing record sums in response to the virus. The interest on this debt will need to be paid, thus increasing the overall burden on the economy. Corporate debt is at a new record high relative to a widely-used cash flow measure. The amount of shares sold short in the overall stock market is at a 15-year low. A significant source of demand for stocks is the demand by short sellers to buy back the stock that they h...

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