In the wake of the latest economic news from the US, Oreana Financial’s Isaac Poole agrees ongoing disruptions to global supply chains are an upside risk to inflation. However, he also agrees with the Fed that very high near term inflation will give way to inflation at or above the Fed’s target. The most important impact for the Fed will be wage costs, which are also increasing due to supply constraints but they have a tendency to be less transitory and more sticky. So from an asset allocator perspective, he says the focus must be on companies that are able to pass on costs to retain margins, or that can quickly invest in productivity enhancing technology. Isaac says US companies are the most likely to be confident enough to embark on a strong capex cycle, telling ausbiz the outlook remains negative for Treasuries. (Source: Ausbiz)
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