This Last Week of April 2022...where the money is going
Account statements for the first quarter are going to be painful. The bond market was down 5.9% through March 31st, counting reinvested income. This is the worst three months since the quarter that ended Sept. 30, 1980.”
Corporate Spending has to be regulated. In the report, Practical Stake: Corporations, Political Spending and Democracy, released today, the Center for Political Accountability spotlights the risks that unaccountable corporate political spending poses to democracy: it matters to all of us to have a well-functioning democracy. “Our report highlights these existential risks in today’s explosive political climate and offers companies a point-by-point framework for addressing the challenges,” Bruce Freed, CPA President continued. “It will offer companies guidance as they try to navigate pressure to contribute political money in advance of midterm and the 2024 elections.”
This Week’s Profile: ALPS: Here is the Future
We will have many choices to make over the coming months and ESG is all about how our world is changing and how to capitalize on the opportunity, in the middle of this chaos. Here are a few headlines that crossed my desk this week:
“BlackRock targets 75% of assets in net-zero investment by 2030”
“Plug Power Rises on Agreement to Supply Green Hydrogen to Walmart”
“Tech Earnings Give Snapshot of Economic Headwinds Ahead”
“With stocks down roughly 10% in 2022 and the bond market off to its worst annual start in more than half a century, earning even a mildly positive return on safe assets suddenly sounds mighty fine”
“JPMorgan’s Dimon gives Gloomy Outlook as Profit Slumps”
“Rich Bernstein: Prepare for Upheaval, Paradigm Shift in Portfolios”
“Recent upheaval in the financial markets is creating new risks and opportunities, and investors should rethink their asset allocations to capture these trends, according to two market strategists.”
“The Fed Is on the March. Can Your Bond Fund Keep Up? Bond investors have been pummeled this year as the central bank has tightened up.”
The key will be to look at what the future is bringing us: below is ALPS Clean Energy ETF, ACES…one of the funds we’ll be buying as this market brings us better values.
The inflation spike of 2021 and 2022 hits us where it hurts…our pocketbooks. What is REALLY going on? If we look under the hood we will see that the price of almost everything in the U.S. economy can be broken down into the three main components: labor costs, nonlabor inputs, and the “mark-up” of profits over the first two components. Since the bottom of the COVID-19 recession in the 2nd quarter of 2020, overall prices have risen at an annualized rate of 6.1%—a pronounced acceleration over the 1.8% price growth of the pre-pandemic business cycle of 2007–2019. I don’t know why I am shocked that 53.9% of this increase can be attributed to fatter profit margins: labor costs contribute less than 8% of this increase! This is not normal: from 1979 to 2019, profits were only 11% of the price growth and labor costs 60%: see Figure A below. Supply-chain snarls—are also driving up prices more than usual in the current economic recovery.
☹ Why does this matter to you? It is unlikely that corporate greed or the power of corporations generally has increased during the past two years. Instead, the already-excessive power of corporations has been channeled into raising prices rather than what they have been doing in recent decades: suppressing wages. One way to prevent corporate power from being channeled into higher prices in the coming year would be a temporary excess profits tax. The historically high profit margins in the economic recovery are an outrage: this is not inflation based purely on economic overheating. Excess profits, not wages, need some controls.
Plug Power stock surged Tuesday after the hydrogen fuel cell company announced a delivery agreement with Walmart. Under the agreement, Plug Power (ticker: PLUG ) has an option to deliver up to 20 tons per day of liquid green hydrogen to power the retail giant’s material handling lift trucks across its distribution and fulfillment centers in the U.S. Walmart has partnered with Plug Power since 2012, when it launched a 50-fleet fuel cell pilot. That has then expanded to a fleet of 9,500 plus; “Walmart has been an early adopter of innovative hydrogen and fuel cell technology for over a decade, and our hydrogen-powered solutions offer a tool to enhance productivity improvements for Walmart’s operations,” said Andy Marsh, Plug Power CEO.
😊 Why does this matter to you? This is one of the first green hydrogen supply contracts for Plug Power, which is one of the holdings in the ALPS Clean Energy ETF, a fund most clients will own. Green hydrogen is produced through the electrolysis of water with electricity generated from zero-carbon sources. Plug will deliver the green hydrogen using a fleet of liquid transport using capabilities from its recent acquisition of Applied Cryo Technologies. The future is here!