Eco-Friendly Failures Hit HardMarket Sizzle: Inflation Rises, Oil Cuts, Insurance Fails, Costco Wins
Ever tried taking a sip of Coke and ended up dodging a cap attack? Coca-Cola’s new attached bottle caps are causing quite a stir in Europe. While they’re eco-friendly, they’re also smacking drinkers in the face. It seems like everything eco-friendly continues to be worse. Inflation Battle Heats Up
The Federal Reserve’s favorite inflation measure rose 2.7% in April. This matches what economists expected. The core index, which skips food and energy prices, went up 2.8%. The 10-year Treasury yield was 4.512% on Friday, down from 4.553%. Bond prices rise when yields fall. The S&P 500 gained 0.8%. At the start of the year, many thought interest rates would drop. But early inflation data made that seem unlikely. Recent data gives hope for rate cuts before year-end. The economy grew slower than expected in early 2024. GDP grew at 1.3%, lower than the 1.6% first estimate. Investors think there's an 81% chance of a Fed rate cut this year. By September, the chance of a cut is about 47%. The Fed's inflation goal is 2%. In May, the Fed kept rates high, citing slow inflation progress. Their next meeting is June 11-12. Fed President Kashkari said rates might stay high longer to control inflation. Oil Price Spike Looms
OPEC+ has decided to extend production cuts into 2025. This means oil prices may stay high, especially during the U.S. presidential election. Saudi Arabia is selling shares in its oil company, Aramco, to fund economic projects. OPEC+ will keep reducing oil output by 3.66 million barrels daily. The United Arab Emirates will get a new quota in January. Eight top producers, including Saudi Arabia, will keep voluntary cuts into 2025. These cuts aim to boost prices and avoid a global surplus. Brent crude oil is about $83 a barrel now. Higher oil prices are meant to help Saudi Arabia's economy. Compliance with the cuts has been tricky. Russia, Kazakhstan, and Iraq have overproduced recently. OPEC's next meeting will be a mix of in-person and online, with many watching closely. Costco Crushes Inflation Woes
Costco is winning big during high inflation. People are paying $60 yearly to shop in bulk and save money. Costco’s shares have more than tripled in five years. The company now has a market value over $350 billion. Costco has 876 stores, mostly in the U.S. It grew during the pandemic and still does well with 3% inflation. Customers pay for membership and get low prices. Renewal rates are over 90%. Costco makes money by selling fast and in bulk. It even sells gold bars online sometimes. Costco's recent sales hit $57.4 billion, up 9.1%. Membership fees alone were $1.1 billion. Walmart’s Sam’s Club and BJ’s are also doing well. People want value, and warehouse clubs provide it. Insurance Crisis Ignites Panic
Extreme weather is exposing insurance flaws. Climate change is causing more floods and fires, and insurance companies can't keep up. For four years, natural disasters cost insurers over $100 billion annually. This includes record-breaking events, even in quiet hurricane years. Insurance models are failing to predict these events. “Models aren't working,” says Lindsay Keenan from Insure Our Future. Reinsurers are losing big and tightening terms. In 2022 and 2023, U.S. insurers lost over $20 billion each year. State Farm stopped new policies in California due to losses. Experts say climate change needs better models. “We're not changing fast enough,” says William Berkley from WR Berkley Corporation. New software and tools are being developed, but the risk remains high. Scientists warn of even more extreme climate scenarios. Insurance rates are rising, and more people are relying on state-backed insurers. Quick Sizzles
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Senin, 03 Juni 2024
Eco-Friendly Failures Hit Hard
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