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A strong start to the year
Fewer companies are citing inflation and recession on earnings calls this quarter in the U.S.
The number of companies discussing inflation is also down meaningfully.
Given that the consumer has been fairly strong, margins are relatively stable and earnings have not fared as bad as expected, its been a strong start to the year in developed markets.
I think the pain is still to come, we haven't yet hit the corporate debt wall, many companies are still benefitting from fixed-rate debt taken out before the latest hiking cycles. When they look to refinance, profit margins will tighten significantly with them paying much higher rates of interest. We are also yet to see the impact of tightening from the recent banking crises. The consumer may remain strong, but when that wall comes, jobs will be lost, consumer earnings will fall and consumer spending will drop.
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