Wednesday
Is inflation so bad?
Inflation. Rising rates. Historically, that's been a lethal combination for stocks. But this time around, investors are seeing the bright side.
At first blush, the negative reaction would seem to be dead on. Higher inflation could be bad news for economic growth if it keeps consumers from spending. If the Federal Reserve raises rates to cool off the economy, that could be bad news for stocks, making financial conditions too tight for comfort. The last time the Fed went on a rate-hiking spree, in 1994, the S&P 500 had a down year.
On the other hand, a jump in inflation could mean that, after years of scary talk about disinflation and deflation, companies are finally getting a taste of pricing power, which could be good news for earnings. If inflation and higher rates are just the smoke that comes from a hot economy, then bring 'em on, some analysts said.
more..
At first blush, the negative reaction would seem to be dead on. Higher inflation could be bad news for economic growth if it keeps consumers from spending. If the Federal Reserve raises rates to cool off the economy, that could be bad news for stocks, making financial conditions too tight for comfort. The last time the Fed went on a rate-hiking spree, in 1994, the S&P 500 had a down year.
On the other hand, a jump in inflation could mean that, after years of scary talk about disinflation and deflation, companies are finally getting a taste of pricing power, which could be good news for earnings. If inflation and higher rates are just the smoke that comes from a hot economy, then bring 'em on, some analysts said.
more..
