Up, up, up again. The Wall Street Journal poll of economists leaves little doubt: the price index, outgoing in a few hours, will confirm the trend of increasing prices, arrived at 5% barrier up from a year ago. To review growth of a similar magnitude we must go back to 2008, in the midst of the turmoil caused by the financial crisis. This time, however, the origin of the phenomenon is above all the energy released by the recovery, which affects raw materials as well as wages.
But what about profits? As it happens, the inflation data arrives on the day the Corporate America quarterly campaign begins. A good opportunity to evaluate whether, quarter after quarter, the recovery of the US economy continues with respect to the failures of the pandemic. That is, to establish to what extent the rally on Wall Street, up 16 percent since the beginning of the year, is justified or not.
A few hours after the kick-off of the match, this year inaugurated by Pepsico's accounts before the big names take the field (JP Morgan and Goldman Sachs in the lead), analysts are betting on the stability of the lists. Factset expects earnings of companies in the Standard & Poor's 500 index to increase 63%, up from 52,5% in the prior quarter. The rise in inflation does not worry much: on the contrary, with the most difficult season over, the banks are ready to take advantage of a widening of the interest rate gap and to reward shareholders with dividends and buybacks. Another growth driver of the price lists will be energy: the increase in oil prices allows a breath of fresh air for large and small protagonists of the price list. Also because, despite the flurry of records from the American markets, the fundamentals remain under control: the price/earnings ratio is 21,6 times, slightly below the December figure (22,1).
However, these numbers only partially comfort the US financial centre, which is now also mobilized to absorb the offer of 120 billion bonds at auction. In fact, Wall Street is also supported by the low interest rate of T-bonds nailed to around 1,35% on ten-year bonds. How long will such a marked imbalance between the bond market and inflation be sustainable? That is, until the stock market yield, above 3%, enjoys such a massive advantage over bonds?
Of course, the main creditor of the Treasury is the Fed, who will reiterate tomorrow through President Jerome Powell that inflation is only temporary. Nor does the second creditor of the United States threaten, namely the Japan, faithfully deployed in the Yellow Sea alongside Washington.
The same is not true, however, for the 1.100 billion dollars in bonds held by China, separated by a conflict that registers new chapters every day: the last concerns the document on the risk of atrocities in the world presented to Congress on Monday evening by the Secretary of State Anthony Blinken: among the six places on the planet where the greatest recourse to violence and cruelty, Xinjiang is also indicated. But it is unlikely that human rights can upset the global balance of debt, a problem that unites East and West.
If anything, with a strange synchronicity, Washington and Beijing have put in the viewfinder the Big Tech, protagonists of the digital revolution. The US Antitrust goes on the attack of Google, Facebook and Amazon, now able to condition every sector of the economy (and thus slow down the benefits of competition). Beijing, after the punishments inflicted on Jack Ma and Didi, scared ByteDance, the company of the app TikTok which has decided to postpone its listing project in Hong Kong and on the Nasdaq to a later date, after a series of meetings with Chinese agencies that monitor the protection of consumer rights, put at risk by the immense amount of data collected from the platforms.
But be careful: according to Xi Jinping, these data are not private, but belong to the state.
