Inflation is on everyone’s mind, as prices for goods and services have jumped over the last few months.

• But many of the market participants and company executives who are talking about inflation are also admitting that it may not be that big of a deal, writes Axios Markets correspondent Sam Ro.

Why it matters: Runaway prices could erode consumer spending power and pressure corporate profit margins.

Catch up quick: New survey data released on Monday from Deutsche Bank shows 61% of financial market professionals say higher than expected inflation is the largest risk to markets.

• Business activity and consumer sentiment surveys across the board flag inflation as a major concern.
• Even the Fed acknowledged inflation has been higher than expected.

During the Q1 earnings season, 197 of the S&P 500 companies discussed inflation on earnings calls. This was the highest number in at least 10 years, according to FactSet.

But, but, but: FactSet analyst John Butters took a closer look at what companies were saying and found — despite rising costs — many of them were actually raising expectations for profit margins and net earnings over the past three months.

• "For the entire S&P 500, both the estimated earnings growth rate (34.8% vs. 24.9%) and estimated net profit margin (12.1% vs. 11.4%) are also higher today compared to March 15," Butters wrote in a report.

Go deeper: And while the Deutsche Bank survey found market pros are concerned about inflation, it also found that 72% believe the recent bout of inflation is either "mostly transitory" or "virtually all transitory."

• That suggests they think inflation is, at most, a temporary risk.

The intrigue: For years, the primary way companies lifted profits was by cutting costs. Now, it seems companies are finding they can raise prices faster than costs are rising, thanks to a customer ready to spend.

Threat level: Runaway inflation can become a self-fulfilling prophecy. If enough people are worried about it even in the short term, business owners could raise prices proactively, or consumers could start hoarding goods.

What’s next: As we enter the second half, it remains to be seen when the supply chain bottlenecks and the labor shortages driving inflation will eventually ease up.

The European Union has opened an antitrust investigation into alleged anticompetitive practices by Google. (WSJ)

Exxon Mobil Corp. is planning to cut headcount in its U.S. offices by 5%-10% per year over the next several years. (Bloomberg)

Lordstown Motors, the electric truck maker, hosted analysts and reporters at its factory to demonstrate its prototypes. The move came after an executive shake-up, and as the company is under fire for conflicting statements about its prospects. (NYT)

The recent decline in lumber prices may show that the threat of runaway inflation is receding in pockets of the economy affected by pandemic behavior. (NYT)

The earnings environment is going so well for big companies that they're announcing new stock buyback plans at a record pace, Sam writes.

Why it matters: Last year, stock buyback activity fell sharply as companies were hanging onto cash amid extreme uncertainty. The about-face shows that confidence is up, along with earnings.

By the numbers: S&P 500 companies have approved plans for a whopping $567 billion worth of stock buybacks since the beginning of the year through mid-June, according to a new Goldman Sachs report. This is a record for this part of the year.

• It’s worth noting that Apple and Alphabet accounted for $90 billion and $50 billion, respectively, of those announcements.
• Goldman analysts expect companies to follow through with those approvals and execute $726 billion in buybacks this year, up 35% from $537 billion in 2020.

Context: This isn’t the only thing companies are spending money on. Capital expenditures, R&D and acquisitions are all expected to be above pre-pandemic levels.

The bottom line: Corporate cash flows are very strong right now. And business confidence is high enough that America’s biggest companies are happy to shovel cash to their shareholders.

Federal Reserve officials are taking the stage this week, following news the Fed is thawing to the idea of reducing its emergency market support, writes Axios' Kate Marino.

• Examined together, comments in the WSJ Monday from three Fed officials, plus Fed chair Jerome Powell, provide reassurance to markets that on the one hand, the economic recovery is strong — and on the other, the Fed will continue its support for the time being.

Why it matters: We heard from Powell at last week's press conference following the Federal Open Market Committee meeting — and now we’re hearing directly from other officials who will be involved in planning the Fed’s eventual retreat.

What they’re saying:

New York Fed president John Williams said that even though the economy is improving rapidly, he isn’t ready for the Fed to ease up on support.

Dallas Fed president Robert Kaplan said he thinks the central bank should take its foot off the accelerator sooner rather than later in a bid to "avoid having to press the brakes down the road" with a more abrupt shift in monetary policy.

St. Louis Fed president Jim Bullard was somewhat aligned with Kaplan, saying it’s appropriate that the Fed has begun talking about tapering, but added that it will take some time before any plans are actually made.

Of note: Williams is a voting member of the FOMC, but Kaplan and Bullard are not — yet. Bullard will get a vote next year, and Kaplan can vote in 2023, based on the scheduled rotation.

Powell on Monday afternoon also released prepared testimony for today's Congressional hearing on the Fed's response to the pandemic. It largely echoed his prior comments, anticipating strength in jobs and acknowledging higher-than-expected inflation.

The bottom line: The talking about tapering has begun. Watch for more appearances by Fed officials in the coming weeks as the discussion continues.

Merger and acquisition activity in the U.S. is on pace to substantially surpass last year’s total deal value, as companies sit on tons of cash, and debt financing remains cheap, according to a PwC outlook published this morning, Kate writes.

Why it matters: It’s another sign that the economic recovery is firing on all cylinders. Even with public markets trading at sky-high valuations, buyers are stepping in.

By the numbers: From 2016 to 2020, the annual U.S. deal value totaled an average of $1.8 trillion.

• Through May of this year, U.S. deal value already amounts to $1.4 trillion.

What they’re saying: PwC predicts that the year-over-year volume increase this year could exceed 10%.

Context: Megadeals, and "not-quite-megadeals," are a large driver of the activity.

• Through May, 54 megadeals (at least $5 billion in size) have been announced, matching the number of megadeals in all of last year.
• Since then, Medline unveiled the largest pure LBO since the financial crisis.
• Deals between $1 billion and $5 billion are also accelerating, with 200 transactions in the first five months of the year, compared with an average of 230 announcements annually in the previous five years.

What to watch: Private equity and SPAC activity through the second half could help drive deal flow higher.

• Private equity firms are "more active than ever," with 39% of this year’s deal volume — compared to the mid-to-high 20% area in 2017-19. And they’re still sitting on loads of capital to deploy.