Geopolitical/supply chain shock -> higher cost of base goods -> gov/corps supporting consumer balance sheets -> weakening gov/corp profitability -> higher yields -> attract funding for capex directed at solving expensive commodity/supply chain costs -> hopefully back to a less inflationary world with structurally lower commodity input costs. Yes, overwhelming majority of SP500 won't like these dynamics. Question is how does the consumer end up? Can they extract enough wages from shareholders? It will be a battle and I suspect real income and living standards for all will suffer/be more expensive.
Where is growth? Probably in businesses trying to solve for the geopolitical/supply chain shocked world. Something tells me demand reduction induced by CB won't be enough to solve for higher prices without a serious employment crisis (as you alluded to). Worried about credit cracking in the meantime! Consumers are starting to feel the pinch.
Surprised an OPIC hasn't formed to counter OPEC. Though I suppose the G7 price cap might be the first hint of that.
It is an interesting flywheel.
Geopolitical/supply chain shock -> higher cost of base goods -> gov/corps supporting consumer balance sheets -> weakening gov/corp profitability -> higher yields -> attract funding for capex directed at solving expensive commodity/supply chain costs -> hopefully back to a less inflationary world with structurally lower commodity input costs. Yes, overwhelming majority of SP500 won't like these dynamics. Question is how does the consumer end up? Can they extract enough wages from shareholders? It will be a battle and I suspect real income and living standards for all will suffer/be more expensive.
Where is growth? Probably in businesses trying to solve for the geopolitical/supply chain shocked world. Something tells me demand reduction induced by CB won't be enough to solve for higher prices without a serious employment crisis (as you alluded to). Worried about credit cracking in the meantime! Consumers are starting to feel the pinch.
Surprised an OPIC hasn't formed to counter OPEC. Though I suppose the G7 price cap might be the first hint of that.