Why The Fed's take on inflation is wrong-
While American companies just rode the wave of inflation to record profits, BofA’s corporate misery indicator now points to “a bad inflation environment” that could hurt profit margins. The indicator, which compares the growth rates of the real economy and consumer prices against wage growth, has shown a close relationship with the profit cycle.
Gina Martin Adams, chief equity strategist at Bloomberg Intelligence, echoes the concern, noting consensus margin estimates have fallen for 140 companies in the S&P 500 during the past three months and are driving variation in returns among stocks. Over the stretch, firms whose margin estimates fell saw their stocks slide about 1% on average. That compared with a 5% gain for those with rising margin forecasts.
More ominously, a peak in margin forecasts foreshadowed four of the S&P 500’s largest routs in the last decade, including the one last year, BI’s study shows.
“Longer-term forecasts have been persistently higher as analysts see cost pressures as largely temporary, but sustained inflation numbers threaten to eat away at company profitability,” Martin Adams wrote in a note. “If the August stall in expectations turns into an outright decline, it’s likely to lead to a drop in the market at large.”
While American companies just rode the wave of inflation to record profits, BofA’s corporate misery indicator now points to “a bad inflation environment” that could hurt profit margins. The indicator, which compares the growth rates of the real economy and consumer prices against wage growth, has shown a close relationship with the profit cycle.
Gina Martin Adams, chief equity strategist at Bloomberg Intelligence, echoes the concern, noting consensus margin estimates have fallen for 140 companies in the S&P 500 during the past three months and are driving variation in returns among stocks. Over the stretch, firms whose margin estimates fell saw their stocks slide about 1% on average. That compared with a 5% gain for those with rising margin forecasts.
More ominously, a peak in margin forecasts foreshadowed four of the S&P 500’s largest routs in the last decade, including the one last year, BI’s study shows.
“Longer-term forecasts have been persistently higher as analysts see cost pressures as largely temporary, but sustained inflation numbers threaten to eat away at company profitability,” Martin Adams wrote in a note. “If the August stall in expectations turns into an outright decline, it’s likely to lead to a drop in the market at large.”
IBS) have earned an average recommendation of “Buy” from the six analysts that are covering the stock, 
It flirted with the ath indeed
Also bought some EVLV, calls April 2022.
