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Morning Brief: Demand is leading supply

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In Friday's Morning Brief, Yahoo Finance's Myles Udland weighs in on supply and demand constraints impacting businesses across the world.

Video Transcript

JULIE HYMAN: As you heard about in this morning's Morning Brief, Myles has demand for "Donda," and alas, the internet has not yet provided it. But we have been talking a lot about supply and demand in a lot of different industries. And there was-- when we talked to the Whirlpool CEO yesterday, there was a comment that really sparked your interest and sparked all of our interest, where he really talked about how the paradigm has shifted when it comes to the demand-supply equation.

MYLES UDLAND: Yeah, and Marc Bitzer told us a lot about the way that he doesn't expect things to change for Whirlpool's customers when we get through the pandemic. But something that really stood out to me, and I think to all of us here, was the way he talked about the upside down world that he is now operating in, that his company is now operating in. Take a listen to what he had to say.

MARC BITZER: We kind of reconfirmed our outlook for raw materials, which is a $1 billion headwind. We have raised prices across the globe. And we're 5% to 12%. And we feel we're in a pretty good position to mitigate the effects of the raw material. Having said all that, and that just, of course, with a lot of uncertainty, but, you know, just coming with what we see right now from raw materials, there will be some carryover effect also in 2022. And we will see some inflationary pressure continuing to '22.

MYLES UDLAND: You know, and he also talked a little bit about, Sozzi, the-- and he characterizes the upside down world where when you're a business, any business, but especially a business like Whirlpool, which, OK, they sell dishwa-- basically a commodity business, right? I described it in the post this morning. It's a marketing arm with a manufacturer, like, bolted on, right?

And I think that what Bitzer was sort of telling us is, you know, now they're actually a manufacturer. Now it's like people want it. They make stuff. People say we would like to buy this stuff. So we don't have enough of this stuff. Like, I will wait for this stuff. I am currently waiting. I'm on month three, waiting for a dishwasher to come in--

BRIAN SOZZI: Stainless steel?

MYLES UDLAND: In full disclosure, it's a Bosch, not a Whirlpool. Yes, it is stainless steel. We had to order the shorter one, 2 inches shorter than standard size. I won't get into that here. But I think it's interesting to hear the CEO of an industrial company say, it's-- obviously, it's always about our marketing, but, like, we're focused on trying to meet demand, which is a problem that Bitzer and his team, people of his generation, have almost never had in their careers.

BRIAN SOZZI: Yeah, and it's something we have-- I would say in our lives, haven't had to deal with. You go to a Best Buy. You go to a Home Depot. You go to a Lowe's. You leave with your dishwasher either that day or within the next three days. It gets delivered your house. They put it in. So it is a very much different dynamic.

Interesting also, this strong demand comes despite a Whirlpool raising prices 5% to 12% earlier this year, depending-- actually, believe it was June-- depending on what product line. So consumers, despite having to spend extra $82, let's say $120, for a new appliance, they're still out there. They want this stuff.

MYLES UDLAND: And, Julie, something else that Bitzer told us yesterday is that this time of year, you would normally have consumers waiting for a Labor Day sale, even waiting all the way until a Black Friday sale. And Bitzer basically telling us that's not happening at all. People are going into stores today, saying I would like to order a dishwasher. A KitchenAid, you can probably find more readily, but--

JULIE HYMAN: Well--

MYLES UDLAND: --washing machine and saying, I'll wait because I'm not waiting for that sale because it's going to take a long time to get here.

JULIE HYMAN: Right, well, he also said, don't wait.

MYLES UDLAND: Yes.

JULIE HYMAN: Not only did he say people aren't waiting, he said don't wait because that bargain ain't comment, right? Like, that was his other message. Those typical sales, those typical discounts, they might not get them this year. And so that was a really interesting comment that he made as well that tells us about sort of the stickiness of these price increases. They may not be going up more, but there doesn't seem like they're getting pulled back either.