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Jan 24, 2022

Investors and analysts call on companies to explain inflation impact

Research shows market participants most concerned by inflation, labor issues and supply-chain disruption

Investors and analysts have named inflation concerns as the number one topic they want to hear executives discuss on earnings calls this quarter, according to new research.

A poll of investment professionals, conducted by advisory firm Corbin Advisors, finds 93 percent of respondents want companies to tackle the impact of inflation, followed by supply-chain disruption (51 percent) and labor availability (37 percent).

The survey gathered responses from 75 individuals, with 75 percent hailing from the buy side and 25 percent from the sell side. Answers were collected between November 30, 2021 and January 7 this year.

In December, year-on-year US inflation hit 7 percent, the highest rate for 40 years. Bank earnings last week underlined the extent of wage inflation, although Jamie Dimon, CEO of JPMorgan, said CEOs shouldn’t be ‘crybabies’ about it.

Jamie Dimon, CEO of JPMorgan.

‘Please don’t say I’m complaining about wages. I think wages going up is a good thing for the people who have the wages going up. And businesses simply have to deal with changes in prices,’ he said on the company’s conference call.

The upwards pressure on prices has led many investors to conclude that the Federal Reserve will lift interest rates faster than previously expected, a belief that is hitting tech stocks and other riskier assets.

In a note over the weekend, Goldman Sachs analysts said they expected the Fed to raise interest rates four times this year, though there could be more tightening of monetary policy if inflation continues to surge.

Top investor concerns

In the Corbin research, 86 percent of investors express a high level of concern with inflation, up from 78 percent last quarter, while the proportion fretting over labor availability and costs has climbed from 65 percent to 79 percent.

Supply-chain disruption is the third-biggest worry, but the number of investors citing this as of ‘high concern’ fell quarter over quarter from 86 percent to 67 percent.

Despite their fears over inflation, labor and supply chains, investors and analysts are feeling positive overall given their belief in strong demand trends, finds Corbin’s analysis. Of the respondents, 52 percent class themselves as bullish or neutral to bullish, compared with 45 percent in the previous quarter.

‘I don’t see the market totally collapsing, but I don’t see it going up at the levels we saw [in 2021]. It is going to be hard to maintain that,’ comments a buy-side generalist based in North America.

Investor concerns appear to have accelerated in the weeks since the research took place, however, with the Nasdaq 100 falling 12.5 percent so far this January and the S&P 500 dropping more than 8 percent.