Greedflation was good for profits, until it wasn’t

This is Bloomberg Opinion Today, a disinflationary (that is, free) assortment of Bloomberg Opinion’s opinions. Sign up here. Today’s edition [Bloomberg]( This is Bloomberg Opinion Today, a disinflationary (that is, free) assortment of Bloomberg Opinion’s opinions. [Sign up here](. Today’s edition is written by [Justin Fox](. Today’s Agenda - Corporations [miss greedflation](. - Haley [can’t out-grievance]( Trump. - The Supreme Court [turns Oedipal](. - [Air traffic control]( needs a restart. Inflation Was Profitable While It Lasted In the quarter ending May 1, 2022 (some companies have weird calendars), Home Depot Inc. [reported]( an 8.2% decline in customer transactions from the same quarter in 2021 — a time when, as you may remember, home improvement had become the national pastime. But thanks to an 11.4% increase in the average transaction size, due in large part to sharply rising prices for lumber and other building materials, the company was able to report increases in sales per retail square foot and overall profits that [surprised markets]( and made investors happy. There’s been a big debate during the past few years over whether corporations caused that sharp rise in inflation from mid-2021 to mid-2022. But there’s no disputing that many took advantage of it — and now that inflation is fading, they’re feeling the pinch. Home Depot’s [most recent earnings report](, for the quarter ending Oct. 29 (like I said, weird calendars), shows the decline in transactions falling to just 2.4%, but the average transaction size was down 0.3%. Comparable sales and profits fell by much more than that. This disinflation profit pinch is the [likeliest explanation](, Conor Sen writes, for the rash of job-cut announcements that greeted the new year, and the fact that total hours worked  in the US didn’t budge in the fourth quarter of 2023. It also means that, even amid celebrations over America’s successful economic “soft landing,” there’s still reason to fret. As Conor writes: The hope is that this is all another temporary phenomenon, just one more phase of the economy shaking off the wild swings of the pandemic era. But continued disinflation will put more pressure on companies to find ways of shedding costs, and hiring freezes and reduced workweeks can quickly turn into something more nasty if demand falls any further. One place where this profit pinch doesn’t seem to have hit is in northern Denmark, where several quantitative trading firms based in the cities of Aarhus and Aalborg have upended European electricity markets and generated massive windfalls. Before 2021, the biggest of the lot, Danske Commodities of Aarhus — founded in 2004 — had never reported annual earnings of more than €75 million. In 2022 it made €1.47 billion. Bloomberg Opinion’s Javier Blas has the [whole wild story]( in Bloomberg’s latest [Big Take](. Haley Can’t Beat Trump at Identity Politics Republican presidential hopeful Nikki Haley has been twisting herself into a pretzel lately navigating the minefield of her party’s racial identity politics. (Yes, it’s a mixed metaphor. Get over it.) At a campaign stop in New Hampshire last month, she failed to mention slavery while listing the causes of the Civil War, only to [declare the next day]( that “of course the Civil War was about slavery.” After she [said this week]( in a Fox News interview that the US has “never been a racist country,” a campaign spokesman offered a clarification: “America has always had racism, but America has never been a racist country. The liberal media always fails to get that distinction.” (The authors of [Article 1, Section 2, Clause 3 of the Constitution]( may have failed to get that distinction as well.) Haley is trying to appeal to a part of the Republican base “that increasingly sees whiteness as a politically salient and threatened identity,” writes Nia-Malika Henderson ([free read](), but it’s a fool’s errand. Donald Trump seems to have the White-grievance vote all sewn up, and is doubling down on depicting Haley, the US-born daughter of Indian immigrants, as foreign and, well, not White. In failing to call him on this, Haley “has deprived her flailing campaign of yet another line of attack against the former president.” Overturning Chevron Wouldn’t Be Conservative The Supreme Court heard oral arguments this week in case that could overturn the so-called Chevron doctrine, which gives federal agencies broad leeway in interpreting the statutes they administer. From the sound of the justices’ questions, three members of the court’s conservative majority — Clarence Thomas, Samuel Alito and Brett Kavanaugh — want to kill Chevron, and the three liberals want to keep it. That’s ironic, writes Noah Feldman, given that one of the doctrine’s [most loyal defenders]( was conservative icon Antonin Scalia. “Overturning Chevron would be an Oedipal act, killing the father of modern legal conservatism,” he argues, and would “go down in history as a judicial power grab.” Telltale Charts Passenger volume on US airlines has recovered from its pandemic collapse, and probably set an [all-time record in 2023](. So the fact that there are 10% fewer certified air-traffic controllers at US airports than a decade ago is more than a little unsettling. This staffing shortage [isn’t the only problem]( with air-traffic control in the US, Bloomberg’s editorial board points out. After decades of underinvestment, facilities and technical equipment are way out of date. A possible solution: “[transferring]( management of the air-traffic-control system to a nonprofit or government corporation — while maintaining the FAA’s regulatory oversight — would shield it from Congress’s budgetary chaos, make it easier to hire competent staff and allow for long-term investments.” Investing in China, or at least in publicly listed Chinese companies, has been a bad bet lately no matter where you do it. Indexes of Chinese companies listed in Shanghai and Shenzhen, Hong Kong and New York are all down over the past five years. Why’s that? John Authers [counts the reasons](, which include a deflating real estate bubble, global supply chains diversifying from China and a less than welcoming environment for foreign investors. Further Reading Iran [plays a part]( in all the Mideast’s big conflicts. — Marc Champion Don’t post your firing video [on TikTok](. — Sarah Green Carmichael Nice speech, Milei. But how are you going to [fix Argentina](? — Juan Pablo Spinetto US [bank capital rules]( need a rethink. — Paul J. Davies The US stock market is [eating the world](. — Lionel Laurent The world [needs Ukraine to win](. — Hal Brands Those [94 gas streetlamps]( aren’t sacred. — Lara Williams The [bad economics]( of the UK inheritance tax fight. — Stuart Trow Coinbase [trades Beanie Babies](. — Matt Levine ICYMI US mortgage rates [fall to lowest level]( since May. Ex-Pfizer employee [convicted of insider trading](. [Spirit shares down 70%]( since merger blocked. Kickers Why [Ello is no longer with us](. (Throwback from 2014) Finance media’s [hottest club]( is Ello. Court rules that working for Facebook [is traumatic](. [How to catch]( AI hallucinations. Notes: Please send electricity-trading tips (preferably in Danish) and feedback to Justin Fox at [justinfox@bloomberg.net](mailto:jkarl9@bloomberg.net). [Sign up here]( and follow us on [Threads](, [TikTok](, [Twitter](, [Instagram]( and [Facebook](. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Opinion Today newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022