Stagflationwho was she? The term, coined in the late XNUMXs, indicates the simultaneous presence of stagnation and inflation on the same market. The topic is back in fashion to the point of being at the top of the worries of investors, who fear the return of that particular condition from the Seventies. But where do these fears come from?
First of all, despite the many reassurances received in recent months from central banks around the world, inflation looks less and less “transient”. And this growth in prices (not just energy) is accompanied by a global growth less impetuous than expected in early 2021. And the situation could get even worse, given that there is no shortage of downside risks.
The weakest points of the system are on the supply side: items at the top of the list include the difficulties in international transport e the scarcity of semiconductors, which trigger a domino effect on various sectors of the industry. But the most alarming problem concerns energy, where there are strong tensions on the prices of traditional fossil fuels.
Other risk factors are made up of monetary and fiscal policies – which all over the world are about to become less expansive than in recent years – e the unknown of China, which in the last year has seen GDP slow down significantly (a slowdown that cannot be explained only by the crisis in the real estate sector caused by Evergrande).
All these reasons for anxiety put an end to the bullish cycle of the stock markets, giving way not to real pessimism but to a sort of generalized perplexity. Yet, according to Stefano Fugnoli, Kairos strategist, all of this risks "making us forget some important unquestionably positive elements".
In the latest issue of his analysis column "On the fourth floor", Fugnoli points out that the pandemic seems to be weakening, at least in developed countries, and that even the Delte variant, despite the many concerns raised in recent months, appears to be under control.
Furthermore, “there is in the world a strong backlog of investment demand public and private in production capacity – continues the Kairos strategist – not to mention inventories, close to their lowest limit”.
For these reasons, according to Fugnoli, "a component of the concept of stagflation, stagnation, conspicuous by its absence”. As for the other component, inflation, "a part will decrease due to the destruction of demand and a probable increase in supply, while another part will remain and it will also be seen on the positive side, that of lively demand of raw materials, tangible goods and services”.
Also because in the future the most important factor to consider will not be inflation, but growth: “If there is growth, as we expect – concludes Fugnoli – inflation will be well tolerated by the stock exchanges”.
