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The Cambridge Weekly – 24 January 2022

 

A bumpy road to somewhere

It has been an all-action year so far. Global equity markets have been in a downward trend since the end of 2021, led by US stocks. America’s mega-cap tech companies that were so loved throughout the pandemic have taken the biggest hit – with the tech-heavy Nasdaq falling nearly 10% in January. The change of fortunes was made abundantly clear last Friday morning after stock market darling Netflix plummeted 20% in pre-market trading after a warning on subscriber growth. UK equities seemed immune to the downturn in the first two weeks of the year, but that changed last week as the FTSE 100 joined the broader fall.

 

Earnings outlook

Investors could do with some good news. Inflation pressures continue to bite harder than expected while central banks press forward with their plans for tightening policy. But amid the market fears over global growth, hard data from companies can often provide some respite. As ever, the corporate earnings season for the last quarter of 2021 is an important one.

 

‘Just-in-case’ supply chains

Inflation continues to soar around the world. We wrote last week about how its persistence has driven ‘team transitory’ into retreat – as central banks now scramble to tighten monetary policy and choke off price rises. The strangest part of this, though, is that the argument for transitory inflation was a sound one. Most agree that soaring prices over the past 18 months have come from varied and unique supply-side issues across the world (even if against a backdrop of growing demand) and history tells us that these disruptions are usually short-lived.

 

Read the full commentary here

 

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