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The world has learned over the last year just how important computers are to the modern auto industry, as shortages of vehicles, or of vehicles with certain options, have been created by a lack of chips to put in vehicles at the factory.

An average 2021 automobile has around 1,400 chips in it. With so many chips necessary for each automobile, the shortage is going to take a toll on the industry, cutting the production of an estimated 3.9 million vehicles this year.

Part of the problem with chips is that factories are expensive, costing around $15 billion to build. And, they take a long time to complete, at around 5 years.

With computer chips becoming ever more integral to automobiles, and shortages hurting production, Ferrari has named Benedetto Vigna, currently a divisional president at STMicroelectrics, a French-Italian semiconductor manufacturer, its new CEO. The WSJ reports:

In announcing the appointment, Mr. Elkann cited Mr. Vigna’s “deep understanding of the technologies driving much of the change in our industry.”

The global chip shortage that has led to production delays in the auto industry is expected to continue for months to come. That has called into question the auto sector’s rebound as the severity of the coronavirus pandemic recedes in many countries.

The pandemic’s economic fallout has hit orders for Ferraris and other luxury cars. Ferrari issued a profit warning in May, saying that because of the pandemic it wouldn’t meet profit targets it had set for itself for next year. The company pushed back the target to 2023.

Mr. Vigna follows on the heels of Louis Camilleri, who ran Ferrari starting in July 2018 following the sudden death of Sergio Marchionne, who was CEO of both the fabled sports car maker and the former Fiat Chrysler group, now part of Stellantis NV.

Lumber prices are breaking records. First position Spruce-Pine-Fir futures are trading at over $1500/metric ton. Perhaps the most frightening aspect of the spike in lumber prices is that builders have been able to pass them on to customers. The Fed should be very worried about the rapid rise in prices going directly to consumers. The central bank’s policy of low interest rates for longer could buckle under the pressure if inflation heats up faster than expected.

Ryan Dezember reports in The Wall Street Journal:

The Fed last week recommitted to near-zero interest rates, which have fueled the red-hot housing market. Rising home prices and low rates have also helped existing homeowners refinance mortgages to pocket cash without adding much to payments. Mortgage-finance firm Freddie Mac estimates that Americans last year withdrew nearly $153 billion from their homes in cash-out refinancings. Vacation options were limited by the pandemic and a remodeling boom ensued.

Demand hasn’t been diminished by soaring prices, mill executives say.

“The prices appear to be passing on,” Canfor CEO Don Kayne told investors Friday. Canfor, which owns mills in northwest Canada and throughout the U.S. South, notched quarterly records in sales and profit. “So far we haven’t seen the resistance that you would expect.

Builders including PulteGroup Inc. and the Howard Hughes Corp. say they have offset higher prices for lumber as well as for other building materials by raising home prices without slowing sales. NexPoint Residential Trust Inc. investment chief Matthew McGraner assured shareholders that high lumber prices weren’t eating into the apartment owner’s margins. “Any additional costs, we’ve been able to pass on to the tenants,” he said.

At a recent investor conference, Lowe’s Cos. finance chief David Denton said the home-improvement chain and its rivals weren’t waiting to see if the run-up in lumber prices would be short-lived before raising prices.

“That largely gets passed on pretty much real-time into the marketplace and you’re seeing that across the industry,” he said.

There is likely a storm coming in commodity prices. Young’s World Money Forecast is your port in a storm. Click here to sign up today for regular updates.

First-quarter GDP estimates came in at a robust 6.4%, with growth likely to accelerate to more than 8% next quarter. Over the coming weeks, economic activity in the U.S. will surpass its pre-pandemic high. With the Fed pumping over a trillion dollars of liquidity into financial markets annually and the Six Trillion Dollar Man (Joe Biden) proposing new schemes to run up the deficit, GDP is poised to increase at its fastest rate in decades this year. Josh Mitchell reports:

A burst of growth put the U.S. economy just a shave below its pre-pandemic size in the first quarter, extending what is shaping up to be a rapid, consumer-driven recovery this year.

Gross domestic product, the broadest measure of goods and services made in the U.S., grew at a 6.4% seasonally adjusted annual rate in January through March, the Commerce Department said Thursday. That left the world’s largest economy within 1% of its peak, reached in late 2019, just before the coronavirus pandemic reached the U.S.

The pandemic created a perfect storm for Amazon. With more people shopping, and more people working from home using cloud services, Amazon’s profits have soared. Sebastian Herrera reports for The Wall Street Journal (abridged):

Amazon. AMZN 0.37% com Inc. reported record quarterly profit as demand remained robust for its deliveries, cloud-computing and advertising businesses, capping a blockbuster earnings season for the world’s largest technology companies.

The Seattle company’s profits in the year since the pandemic started exceeded $26 billion, more than the previous three years combined. Net income from January to March more than tripled to $8.1 billion, and revenue of $108 billion far exceeded the average of analyst predictions on FactSet.

The tech giant’s success in the past year has catapulted the company to new heights, after consumers flocked to online shopping during pandemic lockdowns. Amazon’s dominant grip over e-commerce and continued expansion into new industries have strengthened its power, although the company continues to face challenges from regulators and some employees.

Amazon’s first quarter is typically slower than its preceding end-of-year results, which are aided by holiday shopping sales. Yet the company has exceeded expectations in recent quarters. It shattered sales records last year as homebound Americans turned to its delivery services. The company’s stock price rose 76% in 2020.

Amazon’s achievements have come as regulators increasingly scrutinize the company’s market power. Congress has considered changes to antitrust laws that could make it easier for the government to challenge certain business strategies and practices or force tech giants to separate certain units. Last year, a congressional panel found Amazon had amassed “monopoly power” over sellers on its site, bullied retail partners and improperly used seller data to compete with rivals.

In a response to its critics, Amazon is raising pay for many of its employees. Herrera reports elsewhere in the Journal:

Amazon. AMZN 0.37% com Inc. is raising wages for its hourly employees after a majority of workers at one of the e-commerce giant’s warehouses voted not to unionize.

The company said Wednesday that more than 500,000 of its employees would see pay increases of between 50 cents and $3 an hour. Amazon, which offers a starting wage of $15 an hour and employs roughly 950,000 people in the U.S., said the raises represented an investment of more than $1 billion.

According to a report by Edge by Ascential, which claims to deliver “one of the industry’s most accurate and actionable sales-driving data, insights and advisory solution sets,” by 2025, Amazon.com will outpace Walmart in retail sales. Bloomberg‘s Spencer Soper reports:

Amazon.com Inc. will supplant Walmart Inc. as the biggest U.S. retailer by 2025, according to a new report, suggesting the e-commerce giant has too much momentum for Walmart to stop despite big investments in its own e-commerce offerings.

By 2025, U.S. shoppers will buy US$632 billion worth of products at Amazon and retail afflilites including Whole Foods Market, surpassing Walmart’s US$523 billion, according to the report by Edge by Ascential, which measured the value of all goods sold by each company online and in stores with the exception of gasoline. Edge by Ascential helps brands sell products online and in stores.

To assess the relative size of Amazon and Walmart, Edge used gross merchandise volume, which measures how much money shoppers spend at each company. Traditionally company size is measured by comparing revenue, but doing so in this case doesn’t capture the full picture because the two companies have different models.

Amazon generates most of its sales from the approximately two million third-party merchants on its site, charging these sellers a commission that is typically 15 per cent of a given product’s price. What the merchants collect doesn’t show up on Amazon’s income statement.

While Walmart has a growing online operation and third-party marketplace, it remains mostly a traditional retailer, buying products from wholesalers and marking them up. Most products Walmart sells show up as revenue, so by that measure Walmart will outstrip Amazon for several years.

The report doesn’t include revenue from Amazon’s cloud computing division or advertising sales. It includes sales from both retailer’s affiliates, including Whole Foods for Amazon and Sam’s Club for Walmart, but doesn’t include fees for subscriptions like Amazon Prime or Sam’s Club.

“The pandemic has permanently shifted consumer habits from in-store to e-commerce,” said Deren Baker, CEO of Edge by Ascential. The main beneficiary is Amazon because Walmart is still playing catch-up even though it’s been spending to add features to its online store, including launching a Prime-style subscription service last year. Amazon, meanwhile, continues to build fulfillment centers around the country in an attempt to speed up delivery and erase the advantage Walmart enjoys with curbside pickup at its more than 5,000 locations.