UK unemployment rate falls as job vacancies and payrolls rise; Rising food prices weigh on households – business | Companies
The stock markets started the week on the wrong foot. From paralyzed supply chains to an energy crisis threatening to paralyze Europe and Asia to growing credit risks in the Chinese real estate sector, There are multiple threats on the radar forcing traders to play defense.
It’s a perfect storm. Supply chains seem overwhelmed as the recent shortage of truck drivers has caused disruption from ports to mainland and depressing corporate profit margins as transportation and energy costs skyrocket at the same time. This burden could be passed on to consumers, reducing real incomes.
Global growth is feared to slow as companies fail to meet demand, but inflation continues to be hot thanks to cost pressures – a toxic combination that central banks are powerless to counter. And with the aftermath of Evergrande spreading into the Chinese real estate market as more developers miss out on their debt payments, there is also a dimension to credit risk.
As I said, this is not a catastrophe either. Growth is unlikely to slow enough to turn it into another recession, and investors remain fairly confident that credit events in China will remain isolated. Hence, although it is too early to call for a low point ahead of an earnings season that is likely to reflect concerns over growth and inflation, light is at the end of the stagflation tunnel.