Inflation Is Alive and Well and Living in S&P 500 Income Statements
- Majority of companies in index show signs of rising prices
- Signal could spell trouble for Fed’s sudden dovish stance
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The Federal Reserve may not see much inflation, but the stock market sure can, and its whereabouts helps explain why enthusiasm for equities continues to build.
To find it you must drill into the earnings statements of American companies -- beyond sales and earnings and down to the lines that track profitability and pricing power. It’s in the row labeled gross margin, which the terminal defines as the percentage of revenue a company keeps after the costs of producing the goods and services it sells.