At least 47 companies mentioned the term “inflation” in their earnings requirements for the first quarter of 2021.
According to a report released by FactSet for financial market data on Monday, this number represents the largest number of companies that have done so in the past decade.
Earlier in April, the US Bureau of Labor Statistics released a PPI report, which saw the producer price index rise 4.2% year-on-year, the highest level since September 2011.
While Fed Chairman Jerome Powell continues to argue that current inflation and consumer price indices are temporary, there is a counter-argument that companies will shift the burden of higher production costs to consumers.
Meanwhile, companies may also be looking for ways to protect their cash reserves from the devaluation of the US dollar after pumping nearly $ 6 trillion in stimulus money into the US economy during the ongoing coronavirus pandemic.
Back in August 2020, Business Intelligence MicroStrategy made headlines when it announced its first Bitcoin (BTC) purchase. Michael Saylor now owns over 90,000 BTC valued at over $ 5 billion, with assets growing nearly five times since August 2020.
Tesla announced Monday that it has sold $ 272 million in bitcoin – about 10% of BTC’s assets – based on the company’s first quarter results. According to Tesla’s first-quarter 2021 profit and loss report, the automaker’s net profit from the sale was $ 101 million.
Tesla first announced its ownership of BTC back in February, announcing that it had bought around $ 1.5 billion of Bitcoin.
Since inflation is expected to continue on its upward path, at least in the short term, many US companies can convert some of their cash reserves into bitcoins. This possibility persisted despite opposing arguments by tax experts in February.
In March, Don Fitzpatrick, chief investment officer at Soros Fund Management, announced that BTC was no longer a secondary asset due to the depreciation of the US dollar.