Join our community of smart investors

Beware central bankers stoking inflation

Phil Oakley doesn't normally listen to central bankers, but reading between the lines of this week's pronouncement from the Fed's Jerome Powell has him worried about inflation's corrosive effect on returns
Beware central bankers stoking inflation

The musings and pronouncements of central bankers should normally be taken with a pinch of salt. After all any well prepared and researched private investor should be able to understand the effect of wider monetary and fiscal policies on the companies within their own portfolio. Amid much brouhaha this week Fed chair Jerome Powell signaled a shift in emphasis towards allowing inflation to rise, potentially unchecked, as a way to help extricate the US economy from its current rather worryingly deep hole. But inflation can have a corrosive effect on investments if the companies one holds in a portfolio suddenly begin to struggle to grow their cash flows and earnings enough to keep returns ahead of the rate of inflation. 

Despite us wallowing in the summer doldrums with an equity market which is pretty much trading sideways at the moment there has been a surprising amount of company activity to report on and this week I take a look at five companies across various sectors, all of whom have had significant news out of late and are facing up to very different challenges. 

Download PDF