JPMorgan Says Inflation, Rising Wages Actually Good for Stocks

Investors rattled by the recent bout of equity selling take heart: the fears about rising inflation and wage growth crimping corporate profits are way overblown, according to JPMorgan Securities Plc strategists.

Mislav Matejka, global equity strategist with the firm, argues it is the outlook for both production and sales volumes rather than higher wages that determine the impact on profitability. “Cyclicals and the broader equity market do not tend to fall when costs start to shoot up, as these increased cost pressures are typically a sign of a healthy economic backdrop,” Matejka and other JPMorgan strategists said in a report.