Post 372: Social Security Insolvency, Boomer Bailouts, and What the Bitcoin-to-Zero Argument Gets Wrong

Post 372: Social Security Insolvency, Boomer Bailouts, and What the Bitcoin-to-Zero Argument Gets Wrong

* After many quarters of negative U.S. sales growth, Yum! Brands decides to offload its Pizza Hut business. * But Taco Bell is still ringing in strong sales growth. * The Starbucks turnaround plan seems to be working. * A look at wealth disparity in the U.S. * And how the older generation has benefited from central bank policies * At the expense of the next generation. * Lululemon’s North American Sales kick off the year by accelerating downwards. * But management thinks they’re off to a good start. * Apple’s sales soar due to the popularity of its new iPhone 17. * A quick look at some price increases in America over the last five years. * Social Security in the U.S. will now be insolvent by 2032. * And a look at some solutions. * Ontario’s housing market is struggling. * And could get worse. * Canada’s government comes to the rescue with a taxpayer-funded baby boomer bailout. * In Financial Ructions: * Technology stocks have now eclipsed their 1999 peak weighting within the S&P500. * But their share of earnings has gone up even more. * That doesn’t mean that they’re cheap. * A look at an op-ed that says Bitcoin is going to zero. * But it makes some assumptions I don’t agree with. * Book Review: Onward by Howard Schultz (Starbucks) * We see the importance of empowerment and letting go. * A lesson our policymakers have unlearned. * A quote from legendary Costco CEO Jim Sinegal. * The importance of investing in your customers. * And the importance of corporate culture.

Post 371: Why Most Policymakers Are Not Good Leaders and Macy’s Joins The K-Shaped Recovery

* Hybrid car sales are soaring.  * And the Japanese dominate the category. * Macy’s and the K-Shaped economy.  * If you can’t beat em, join em. * Kraft Heinz has had 17 straight quarters of volume decline.  * And so decide not to split the company in two. * Core inflation for May in the U.S. was the highest since last September.  * And falling prices that are really rising. * In Financial Ructions  * The U.S. jobs report for May was strong.  * But more than 100% of the net jobs created were part-time.  * And yet again ye ole birth-death model comes to the rescue. * Book Review: Onward by Howard Schultz  * We cover five more chapters (I don’t cover all chapters in the book).  * The importance of the intangibles is stressed.  * Putting your ego aside. * Having passion for the business and the customer * Heritage * Two reasons why the vast majority of policymakers are not good leaders.  * And the importance of teamwork * Far too often the tail of Wall Street wags the dog of corporate America. * And the best time to fix your business model is when it's working.

Post 370: Younger People Priced Out of U.K. and Canadian Housing While Gold Surpasses the U.S. Dollar as World’s #1 Reserve Asset

* In the U.K. the armed forces are being prescribed Wegovy, and Viagra. * More on governments’ contributions to Canada’s housing affordability crisis. * Dollar General continues to grow its sales with higher-income consumers trading down. * UK Stacations. * Brits morning drinking at airports * A look at how much housing in the U.K. became unaffordable since 1997. * Oil consumption is rising  * But its intensity in GDP is falling. * Hilton Hotels is seeing continued growth.  * And across all of it’s brands from high-end to value chains. * In Financial Ructions  * The US Dollar’s influence in the global monetary system peaked in 2015. * The U.S. Dollar index peaked in 2025 but is still higher than pre-COVID. * Gold is now the world’s number one reserve asset * A look at how California’s proposed billionaire wealth tax is already negatively impacting the state.  * And some alternative proposals. * Payroll numbers have fallen in four of the last five months.  * But don’t worry, payroll for government jobs is still going up. * Book Review:  * We continue our review of the Starbucks book Onward and we see:  * The importance of having a passion for the customer value proposition rather than focusing on your share price. * How Corporate culture is crucial for long-term success. * Why CEO Howard Schultz wanted to get rid of the breakfast sandwich.

Post 369: Even Ozempic Can’t Keep Canada Out of Recession

* Generic versions of weight-loss drugs are now on the market. * Costing less to lose more. * Hormel is a U.S. food-processing company based in Minnesota. * Sales improved slightly but it’s all price: volume is still negative. * We take a look back at the maker of Spam. * Sharks vs. Coconuts cage match. * Lululemon makes some changes to its board of directors. * While its share price continues to struggle. * Weight-loss drugs have become so popular that they are blowing holes in the budgets of some municipalities and public health plans. * House prices in Canada have been outpacing income for many years. * And now a whole generation is priced out of the house market in some markets. * Chicken prices are soaring in Canada. * And so are World Cup soccer tickets. * Car prices have risen so much that Americans are buying fewer of them. * Costco continues to chuck along and are a beneficiary of the weight-loss drug craze. * In Financial Ructions: * Despite Canada being subjected to the lowest average tariff rate in the U.S. vs. any other G7 country. * It’s the only one in a technical recession. * Related: Jobs in Canada for younger people are hard to find. * Book Review * We start a new book: Onward: How Starbucks Fought For Its Life Without Losing Its Soul. * We take a slightly different approach to the review. * Right away we see the importance of focusing on the customer rather than the share price.

Post 368: Energy Shock, Mortgage Shock, and a Stretched Consumer

* The fallout from the Iran war in terms of rising energy prices may just be beginning. * US gas prices are up 45% from last year. * Canadians renewing their 5-year fixed rate mortgages in 2026 will see the biggest shock yet to their monthly payments. * More Americans are moving from California and New York to Texas and Florida. * Wendy’s same-store sales have declined in the U.S. for five straight quarters. * Its share price is back to where it was in 1993. * McDonald’s has had four straight quarters of positive comparable store US sales growth. * Although consumer sentiment is worsening and the next quarter will not be as strong. * And a look back. * Walmart continues to drive impressive same-store sales growth in the U.S. although their most recent print is the lowest in two years. * And they too are seeing cracks in consumer sentiment. * Lowe’s eeks out a comparable store sales gain. * But notes that this is the most difficult housing market since the Great Financial Crisis. * Campbell’s Soup has only seen one quarter of adjusted sales growth out of the last ten. * It is walking back some price increases on chips and like Pepsi/Frito Lay, they will be surgical about it. * Its share price is back to 1994 * Core inflation in Canada (excluding energy) continues to tick lower. * The main risk is that it’s due to a struggling economy. * The percentage of Americans making withdrawals from their pension plans for hardship reasons has tripled. * In Financial Ructions: * The yield curve continues to increasingly uninvert. * It’s a bear steepener which doesn’t usually lead to a recession. * Although we had a nasty one in the early 1970s. * We look at the supply of base money relative to M2. * And why inflation soared in the early 2020s. * Judy Shelton makes the case for a shrinking Fed balance sheet and lower interest rates. * Book Review * We complete the last two chapters of the great book False Dawn by George Selgin. * Monetary policy was highly accommodative during World War II. * But not after the war ended, despite yield curve control still being in effect. * We must learn the lessons of the Great Depression and resist resorting to the New Deal playbook. * And a shout out to Hayek.