Inflation will be “stickier for longer” because there are things the “Fed can’t control”, says Henry McVey. He’s the Chief Investment Officer at KKR Balance Sheet.
McVey’s remarks on CNBC’s ‘Squawk Box’
The U.S. central bank resorted to a 75 basis points increase in interest rates after a worse-than-expected CPI print for May. Still, McVey said this morning on ប្រអប់“ Squawk” របស់ស្ថានីយទូរទស្សន៍ CNBC៖
I think oil will stay higher for longer, particularly [for] 23 and 24. So, our view is that inflation will be stickier for longer because of commodities, Russia’s invasion of Ukraine, and the supply constraints. Those are all issues that the Fed can’t control.
Chair Jerome Powell also acknowledged in his press conference that some things, indeed, were “out of our hands”.
Consumers will continue spending on ‘services’
សន្ទស្សន៍អេស & ភី ៥០០ slid nearly 4.0% to a new 52-week low on Thursday. The macro landscape, McVey added, will remain a significant headwind for corporate profits and margin expansion.
We have corporate profits declining 5.0% next year. The consensus is up 9.0%. Wall Street thinks that 85% of companies will have rising margins. I don’t think that’s going to happen in the inflationary backdrop that we foresee.
A sector he expects will “boom” moving forward is “services”. The FOMC members now expect the U.S. economy to grow by 1.7% only versus their earlier forecast for a much higher 2.8% growth instead.
ប្រកាស Henry McVey ស្តីពីអតិផរណា៖ 'មានរឿងដែល Fed មិនអាចគ្រប់គ្រងបាន' បានបង្ហាញខ្លួនជាលើកដំបូង អ៊ីនវេស.
Source: https://invezz.com/news/2022/06/16/henry-mcvey-on-inflation-there-are-things-the-fed-cant-control/