Hello, Blockbusters!

Hello, Blockbusters!

Investors just witnessed "blockbuster earnings of the decade." That highly amusing description of Q2 reporting season comes courtesy of a Bloomberg article dated August 4. Forgive me, but the quote (above) sounds like the awkward subject line of a clumsy, overseas phishing scheme. The only good thing about phishing emails is the comedic value. More often than not, they're written by folks whose only motivation for learning English was to pen solicitations. So you get this: "Greetings of the da
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3 thoughts on “Hello, Blockbusters!

  1. It’s interesting to me how easily prices on consumer goods have been raised. The only explanation that comes to mind is that people were so anxious to get access to their favorite stuff that they became insensitive to price increases. Some of the stuff I buy regularly has gone up 20% or more — fast. Companies are promising there is more to come. I am really amazed, perhaps naively, but the amount of margin expansion is bigger than it has been in my (aging) memory.

    1. Unfortunately I think what I have seen a lot of is consumer goods scalping on anything with remotely limited stock. I think what it has demonstrated over time to certain companies is there is enough price insensitive demand that you can essentially stop worrying about fulfilling total demand. I recall reading a report a decade or so ago about how companies can really stop worrying about the bottom 70-90% of American consumers because they have no money anyway. If someone making $300k a year will buy your product at $400 the same as at $50… then make it cost $400 and make less of them. Who cares about being short of low margin business when you can survive comfortably on high margins. If you don’t have much buying power then you aren’t really important and if you do… well you’re pretty price insensitive.

    2. There is a ‘double whammy’ in this price increase issue in that there is a simultaneous reduction in the quantity in packaging of virtually every product as sold . This likely increases the frequency of purchases.. Putting is simply , your kid is going to eat two one ounce candy bars just like he ate the single two ounce bar at the same price for each bar. That short packaging phenomenon alone throws ‘transitory inflation’ onto the sidewalk five floors below.

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