Home Markets Three stock market rebuttals to the inflation Cassandra case

Three stock market rebuttals to the inflation Cassandra case

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Shares of companies with higher pricing power — the capacity to pass on costs to customers without harming the business — are crumbling relatives to their less-advantaged peers. Meanwhile, S&P 500 stocks with the highest labor costs are trouncing firms with relatively low ones. And corporate operating margins are at all-time highs.

That stands in stark contrast to the alarm bells ringing all over Corporate America. Nike Inc. and FedEx Corp. are among the companies forced to slash forecasts in recent weeks, thanks to a toxic combination of shipping delays, higher input costs and rising wages. Morgan Stanley warned on Friday that the worst isn’t over, particularly for retailers, as supply chain and freight inflation heats up just as sales are decelerating. 

While equity market leadership reveals that inflation is having an impact — energy shares were the only sector to post a gain last month — fear is largely absent…

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