Workers Are No Longer Left Behind
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To the Editor:
Your cover article (“Power Shift,” May 13) should send shudders down the spines of your investing readers, for two reasons. Firstly, it makes clear that there is little chance that, without a pointless recession, inflation in our service-based economy will return to 3%, never mind about 2%, until there is transformational automation of vehicles, warehouses, restaurants, hospitals—you name it. This means that the valuations of financial assets have commenced a downward trend that will continue. Secondly, because of the labor shortage discussed, most corporations have reached peak cash margins, too, which will be compressed further because stock-based compensation will become less attractive than it has been.
However, there are opportunities for investors looking for stocks of growth companies with customers who are no longer left behind. For example: Regional Management and
Oportun Financial
are credit providers to workers who have struggled historically, and Century Communities builds some of the most affordable homes for the increasing group of workers who will qualify, for the first time in generations, for a share of the American Dream.
Ian P. Ellis, Westport, Conn.
In Praise of Barron’s
To the Editor:
From time to time, an issue of Barron’s is so outstanding that it reminds me of why I’ve been a faithful reader for 61 years.
In Randall W. Forsyth’s excellent essay on bond investing in these difficult times (“Falling Bond Prices’ Sweet Upside for Investors,” Up & Down Wall Street, May 13), I got more theoretical and practical knowledge for negotiating these treacherous shoals than I did in my otherwise excellent M.B.A. program.
Similarly, Jack Hough’s bear market primer, “Don’t Panic. It’s Time to Be Bold and Buy Stocks” (May 13), not only reviewed the best of my M.B.A. courses on investing, but also provided an invaluable perspective on precisely where we are today, and what to do about it.
I could go on about Megan Cassella’s cover story on the power shift with labor, and many other offerings this week, but you get the picture.
Anyway, thanks for your wealth of practical knowledge and insights. Without it, I would not have been able to beat the market very handily these past 38 years.
George Powell, Carmel Valley, Calif.
Stay Away From Crypto
To the Editor:
As a long-term investor and one who has been around the block many times, my approach to investing is simple. If you understand it, buy into it. If you don’t understand it, stay away (“How a Digital Token Designed to Be Stable Fueled a Crypto Crash,” May 13). I have read Barron’s for a couple of decades, and as crypto and Bitcoin and similar things have evolved, I have tried to understand them. But for all that effort, I truly do not understand these new monetary instruments and why they have been developed. The headline was that $1 trillion went poof recently. It is obvious that a lot of investors, new and old, jumped in on this “sure thing,” and the result has been fairly predictable in that folks did not understand the facts or the risk involved. Will lessons be learned about crypto? Maybe, until the next sure thing pops up.
Ted Fisk, Naperville, Ill.
The Case for BP
To the Editor:
In “This Energy Giant Looks Like a Bargain” (May 13), Andrew Bary showcases Shell as well as BP, Chevron, and Exxon Mobil. In reviewing the metrics of price, year-to-date change, market value, 2022 earnings per share, and 2022 price/earnings ratios, it appears to me that in nearly every category, BP represents the best value going forward.
Michael Gigante, Wellesley, Mass.
Slam On the Brakes
To the Editor:
Lisa Beilfuss’ article on possible premature easing by the Federal Reserve shows that the central bank is caught between the mythical sea monsters Scylla and Charybdis (“Fed Hawkishness May Be Near Its Peak, Even if Inflation Isn’t. Here’s Why,” The Economy, May 13). Either it follows its current path of raising interest rates and reducing its balance sheet, or it yields to pressure from the financial markets and reverses course.
I doubt it’s a coincidence that shortly after being confirmed for a second term, Chairman Jerome Powell said there would be pain involved in reducing inflation and that the Fed didn’t have total control over a soft landing. The reality is that the central bank faces two unappealing choices: Keep tightening, with its attendant consequences, or refuel a financial bubble that is well past prudent levels.
There are so many economic statistics that one can always be found that justifies a desired action. The personal consumption expenditures deflator may be paramount to the Fed, but consumers paying unconscionable prices for fuel, food, and services will not be comforted by a decline in it.
The cover story on why workers won’t lose leverage also is compelling and points to a likely source of higher prices for a long time to come. Unionizing efforts, even when they fail, will force companies to lift wages to keep unions at bay. With corporate profits at record levels and real wages declining, there will be a groundswell to boost wages. Supply-chain challenges will not disappear quickly, because even low-cost countries are incurring higher costs and China is moving up the value chain to compete in technology and other high-value-added goods.
Sadly, the current situation is much of the Fed’s creation. It kept rates at zero far too long and failed to recognize accelerating inflation. What could have been a process of tapping the brakes has morphed into the need to slam on the brakes.
Robert M. Sussman, Paradise Valley, Ariz.
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