‘Good’ inflation or ‘bad’? Investors are scared because they can’t tell difference just yet
The stock market is generally expected to benefit from inflation, but a long-predicted surge in U.S. prices rattled investors in the past week. A closer look at the historical record might indicate the source of concern, according to one Wall Street analyst.
For equities, there is “good” inflation and “bad” inflation, said Nicholas Colas, co-founder of DataTrek Research, in a Thursday note. Good inflation lifts corporate earnings as long as employment remains high; bad inflation causes recessions, undercutting corporate earnings.
“Markets are volatile because they’re not sure which sort of...