Skip to main content

Who ate my donut?

Kids are known to blame their dogs for eating their homework! Looking at one of the photo forwarded by a friend, I can blame supply chain for "Who ate my Donut?"

The Supply Chain issues are seen everywhere - from corporate earnings to weird economics of used cars selling more than they were bought for. Supply chain issues are mentioned in every earning call multiple times - even by companies which are supposed to be all digital. The ports are backlogged with ships lined up for miles to get unloaded. What happened in the world priding itself "just-in-time" and efficient, all connected flat world. Pandemic threw a wrench in this supposedly well-oiled supply chain engine. 

When Pandemic hit in early 2020 across the world, after initial spurt of demand in consumables (remember toilet paper shortage?) demand for travel, autos etc vanished overnight including labor.  No wonder crude price went negative briefly. Governments pumped up trillions of $$ to keep their economies afloat and helped citizens with stimulus. Central banks reduced interest rates to zero and pumped up more money. All of this helped overcome pandemic induced shock. In early 2021, vaccination drives across the world helped reduce the impact of pandemic and people started becoming more comfortable getting out. The demand for everything suddenly jumped. People wanted to get out and spend their savings maybe because Pandemic also reiterated the belief that life can be so unpredictable! So why not live a life little? All of this caused economies to go from demand side shock to supply side shock. Companies were not ready for sudden spurt in demand. Due to complex nature of supply chain, even one small part (more likely some chip) would block production of iPhone, car, toys or clothing.

Policy holders were slow to recognize and act on this - latest CPI and PPI results clearly show that inflation is running hot. Airline tickets are costing 2-3 times of normal prices, hotel rooms are twice as costly, restaurants are at least 25-50% costly. Autos are selling above MSRP. And let's not even talk about housing prices..they are more bubbly than housing bubble of 2006-2008.

So how long would it continue? By many experts, it would continue well into 2022. So if you are looking for your summer vacation, start booking now. Looking at prices for 2021 holiday season, you may want to consider booking your vacation even for 2022 holiday season. When it comes to my Donut, hopefully some of my friends would apply their newly acquired baking skills to make artisan donuts!

/Shyam


Comments

Post a Comment

Popular posts from this blog

Clicks to Tokens: Will 2026 Echo 1998's Boom or 2000's Bust?

My "blogging" was in hibernation last 8 months due to my self-imposed restraint given the environment as well as built-in inertia to get started despite so many interesting events and markets reaching all time highs after taking a big dump around "Liberation Day" in Apr...Around that time I had the blog ready that it would be repeat of Mar/Apr 2020 panic and recovery during onset of Covid Pandemic. The hunch happened to be correct and I was glad that I could keep and take some positions which I am still holding especially around AI theme. But that was then...as 2025 is about to wrap up in 10+ weeks, let's look at what's in store for rest of 2025 and 2026. And what's better time than to start writing again just before one of the most important week on the calendar with multiple key events coming up next week... Fed meeting to decide the course of interest rates - it's almost guaranteed that Fed will cut rates by 25 basis points (2nd time in 2025) and...
Post a Comment
Read more

2026: The Year of Convergence – Melt-up, Moonshots, or Mid-cycle Correction?

Happy New Year! After another period of self-imposed hibernation from the blog—partly due to the festivals, travel, intertia and partly to watch the dust settle on a chaotic 2025—I decided to use the quiet of this New Year’s morning to finally reboot.  Looking back at my October post,  “Clicks to Tokens,”  the hunch about the AI theme held firm. We spent much of 2025 debating whether we were in 1998 or 2000. As we enter 2026, the answer seems to be "neither and both." We have the roaring optimism of the 1920s fueled by "Silicon Spirits," but with the high-speed volatility of the 2020s. So, as the calendar flips, what is in store for 2026? Markets may experience melt-up (S&P touching 8000),  with some moonshots (like SpaceX and OpenAI) IPOs or even see mid-cycle correction bringing down S&P to 6000. That's a wide range and will be decided by Four R's... Here are my thoughts on the " Four R’s ":  Rates, Robots, Rotations, and Real Assets. 1. ...
Post a Comment
Read more

Stree-Dhan vs. Oracle of Omaha!

Happy February! After another brief hibernation from the blog—partly to digest the early year volatility and partly to observe the shifting sands of global liquidity—it’s time to look at some fascinating disconnects in the market. Lately, I’ve been thinking about the "Unbeatable Asset Class." No, I’m not talking about the S&P 500 or Nvidia. I’m talking about a collective force that has quietly outperformed the "Oracle of Omaha" for over two decades. 1. The Golden Saree: Indian Women vs. Warren Buffett If you look at the performance of Berkshire Hathaway (BRK-B) since the launch of the GLD ETF (the first gold ETF) in late 2004, you’ll find a startling reality. While Buffett is the gold standard of value investing, the "Gold Standard" itself—specifically in the hands of Indian households—has been a formidable rival. Data shows that since the inception of the GLD ETF in November 2004, the total return on Gold has actually surpassed Berkshire Hathaway. I...
Post a Comment
Read more