Inflation concerns dampen consumer confidence – Zurich Weekly 22nd November 2021

In the US, the latest Consumer Price Index reading saw the year-over-year
rate move above 6%, the highest in 30 years. This move pushed rate hike
expectations forward a little further. Consumer confidence dipped as nearterm inflation expectations increased to 4.9%.
With around three quarters of European companies having reported Q3
earnings so far, 61% of companies have beaten on sales, a historically
elevated level, but also below the 12-year high of 67% seen in Q2. “Inflation”
concerns was mentioned on average nearly three times on each Stoxx 600
earnings call in the Q3 reporting season, the highest level on record, with
data going back to 2007. At a sector level, inflation mentions were highest
among consumer staples, financials and materials, while supply-chain
mentions were most frequent among industrials and tech companies. Banks,
autos and insurance have seen the strongest EPS beats in Q3, while
construction materials, travel & leisure and real estate have lagged behind.
At a country level, Austria, Italy and France are leading on EPS beats, while
Norway and Belgium are lagging. Among European styles, growth and value
stocks are reporting the strongest beats, quality stocks the lowest.
Finally, new climate objectives set during COP26 may see investors
reassess the green energy and clean technology opportunities, as well as
the adaptability of traditional fossil-fuel giants, that could shape portfolios in
the future.