🍟 Rising Fast Food Prices Starve Wallets

What’s on the Menu 🍴

We’ve got a HUGE week ahead…

From tax season to the bitcoin halving to earnings season…

This week will likely be volatile and packed with action!

Let’s jump into it:

• Rising Fast Food Prices Starve Wallets 🍟

• What to Watch This Week 👀

• Tax Day: Filing An Extension? Avoid This Big Mistake 📁

Today’s newsletter is a 4 minute read.

Rising Fast Food Prices Starve Wallets 🍟

Fast food and inflation — these two terms rarely shared a sentence until now.

When we think of fast food, it's usually synonymous with quick, convenient, and most importantly, affordable meals.

But the data from the last decade tells a rather stomach-turning story. The price of grabbing a bite at your favorite fast-food joint has been quietly munching away at your wallet far more aggressively than general inflation would suggest.

Let's take the Golden Arches as our prime example.

McDonald's, a global emblem of fast food, has seen prices soar nearly 100% over the last decade.

Compare that to the official inflation figures clocking in at around 31%, and it's enough to cause heartburn.

While Big Macs aren't typically basketed with healthcare, education, or housing in economic analyses, this trend is a poignant illustration of how inflation can hit where it hurts — everyday living expenses.

This phenomenon isn't just about percentages on a chart; it's about people. Particularly, it's about the lower-income earners who traditionally relied on these affordable meal options.

McDonald's itself has observed a concerning trend: a noticeable drop in visits from this demographic.

The reason?

The cost of eating at home has become more competitive, offering a more wallet-friendly way to fill up.

CEO Kempczinski’s observation that "the battleground is certainly with that low-income consumer" couldn't be more apt.

What does this mean for the everyday American?

For starters, it could reshape the diet and dining habits of millions. If fast food no longer equals cheap food, it's not just a cultural shift; it’s a financial one.

This could lead to positive outcomes, like healthier home-cooked meals, or negative ones, such as increased food insecurity for those who can’t afford the rising costs.

For investors, there's a multi-layered takeaway.

There's the obvious potential reconsideration of fast food stocks and the broader consumer discretionary sector.

But there's also the less direct but equally important consideration of how disposable income changes affect the economy at large.

After all, when it costs more to "supersize it," those extra dollars have to come from somewhere — and they're likely to be pulled from other spending categories.

In essence, the fast-food inflation curve isn't just a graph; it's a socioeconomic barometer.

And it’s one that warrants close attention, not just from consumers and investors, but from policymakers too. Because when the cost of the dollar menu rivals a grocery bill, it signals a change in the economic winds that affects us all.

What to Watch This Week 👀

Strap in tight, it’s going to be a busy week with the potential for higher volatility in financial markets.

Last week, the S&P 500 index closed down for the second consecutive week. That’s the first string of two down weeks since October 2023.

Escalating conflict in the Middle East coincided with a hotter than expected CPI inflation report in the US, which pushed most risk assets down.

Even gold and silver, which have been surging higher this year, pulled back on Friday given investor jitters.

Crypto markets also experienced a quick selloff over the weekend during the Iran attack.

Meanwhile, the Bitcoin halving event occurs this week, throwing more uncertainty into the mix.

If that wasn’t enough, Q1 earnings reporting season kicks into gear this week.

We’ll get earnings reports from within the financial, airline, and semiconductor sectors.

The reporter list includes companies such as Bank of America, Goldman Sachs, Netflix, TSMC, Charles Schwab, American Express, United Airlines, and more:

On the macroeconomic front, we’ll get retail sales data from the US, UK, & China, as well as inflation data from the UK, Canada, & Japan:

• US retail sales (Mon)

• China retail sales (Mon)

• China industrial production (Mon)

• China Q1 GDP growth rate (Mon)

• UK unemployment (Tues)

• US building permits (Tues)

• Germany economic sentiment (Tues)

• Canada inflation (Tues)

• UK inflation (Wed)

• Japan inflation (Thurs)

• UK retail sales (Fri)

There were no major equity sectors that finished higher last week, and a rising percentage of stocks are now below their shorter term moving averages.

Previous dips have been bought quickly this year, but some signs suggest this correction could play out differently given the external factors present.

Banking behemoth JP Morgan Chase had a notable 6% down day after reporting earnings last Friday. The financial services sector should remain in focus for investors this week.

We’ll also be keeping an eye on the following assets & sectors:

📈 Rising Recently:

• Gold (GLD)

• Silver (SLV)

• Crude Oil (USO)

📉 Falling Recently:

• Small Caps (IWM)

• Financials (KBE / KRE)

• Crypto (BTC / ETH / WGMI)

• Bonds (TLT / IEF)

• Real Estate (XLRE)

• Homebuilders (XHB)

• Airlines (JETS)

• Solar (TAN)

• Momentum (MTUM)

Tax Day: Filing An Extension?
Avoid This Big Mistake 📁

April 15th isn’t the most loved day in America. It’s tax day, which means you’re either happily getting a tax refund, or you owe cash to Uncle Sam.

Many people (especially business owners) end up filing a tax extension because they’re just not prepared yet to file.

Between waiting for different tax docs to be sent, a bookkeeper to officially close your books, or just getting your ducks in a row, it can warrant an extension.

Here’s a big mistake people make though when filing a tax extension: they think it’s an extension to PAY their taxes as well.

It’s not.

I repeat, a tax extension is only an extension to FILE, it’s NOT an extension to PAY your taxes.

So, extension or not, if you want to avoid paying penalties and interest, you may want to get on the IRS’s website and get a payment in.

For years, while interest rates were low, many people would just pay later and take the penalties and interest. The penalty for failure to pay is 0.5% on the balance owed. Low interest rates made this less of a hinderance.

However, interest rates are much higher, and not paying on time can lead to some steep charges.

The interest rate will be 8% compounded daily for the balance that you end up owing. Add this to the failure to PAY penalty by not sending money to the IRS by tax day, and you’re looking at 8.5% total that will be charged.

Of course, the longer you go with the payment not being satisfied, the more this will compound against you.

If you have a big tax bill, it can be a pretty penny.

You might be thinking, “but, I have no idea what amount I should send in because I don’t have anything prepared.”

The IRS essentially wants you to give it your best guess or just use the safe harbor rule.

They want you to pay 100% of the prior years taxes (110% if you make over $150,000) or 90% of the current years taxes.

So, you can use the prior year as your guide if you’re in a pinch.

Either way, it’s a good idea to try to avoid this potentially expensive mistake.

Food For Thought 🧠

"Inflation is the one form of taxation that can be imposed without legislation.”
- Milton Friedman

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.