Rising costs because sales growth has been so strong. So far, the majority of large USĬompanies have been able to generate higher profitability despite Major ports in southern California are moving to a 24/7 schedule Is past, the bottlenecks at US ports have stopped getting worse. Meanwhile, now that the peak import season (August and September) Semiconductor manufacturing, but those waves are easing. RecentĬOVID-19 waves in Vietnam and Malaysia have disrupted apparel and “There are also signs that bottlenecks may be easing. Notably, theĬost of commodities (including energy) is only 5 per cent of The sectors most exposed toĮarnings drag are industrials and consumer discretionary, and toĪ lesser extent consumer staples and tech hardware. Real estate, utilities, energy, and most of materials) should be Software, and healthcare (not to mention smaller sectors like “Large segments of the S&P 500, such as financials, internet, Looking ahead, Haefele said some of the disruptions caused byĬOVID-19, lockdowns and other forces may be easing off. Renewed pressure on energy markets,” he said. Season in the Northern Hemisphere, a harsh winter could put Looking for data points and corporate anecdotes on labour marketĪnd supply chain challenges that might undermine investorĬonfidence in the sustainability of margins. In the third-quarter earnings season, we will be Nevertheless, we do need to prepare for a period of Turning what was a temporary energy crisis into a stagflationaryĮra. 'defeatist' monetary philosophies played important roles in “Factors like price controls, labour wage bargaining, and There are several reasons why a 1970s-style high inflation period Currently, we see the challenges in energy, product,Īnd labour markets as transitory rather than the makings of a new Markets can look past challenging periods - provided they are not Markets are causing lower economic growth and higher inflationĮxpectations,” he said. Prices and supply disruptions in various product and labour “For those of us old enough to remember the 1970s, we don’t take Past era of zero/negative official interest rates, and that And rising inflation has stirred debate on when the Inflation rate was 3.2 per cent (year-on-year), up from 2 perĬent in July. Supply-chain disruptions have rattled investors. Rising inflation, skyrocketing natural gas prices and Portfolio volatility in the event that continued inflation fears Investors can further diversify portfolios withĪlternatives, including hedge funds, which can help reduce Among defensive sectors, healthcare is our Like financials, energy, the eurozone, and Japan to position for Sector, and asset class to manage current market dynamics. “At the same time, it is important to diversify by region, Supply chain challenges should recede into 2022, and corporateĮarnings should continue to grow,” he said. Positive for markets if it helps to banish fears of deflation.įurthermore, by our assessment, global growth remains strong, Indeed, small increases in inflation expectations can be Structural, we believe equity markets will continue to move “With current issues still appearing more temporary than Haefele, chief investment officer, global wealth management, UBS. Most preferred currency and the Swiss franc is its leastįavourite, according to a monthly briefing note from Mark The firm alsoĭownplayed worries that recent rising inflation is likely toĮndure, saying a repeat of the 1970s high inflation episode isn’tĪs far as currencies are concerned, UBS said the dollar is its Stocks which are able to exploit an upswing in the businessĬycle, preferring eurozone equities over others. Positive towards the world’s equity market, with a bias towards One of the world's largest wealth management houses asks whether the world is going through a repeat of 1970s-style high inflation or a more temporary and less damaging period of price growth and disruption.