Inflation has been a defining theme this year, heavily influencing investors’ allocation decisions and propelling dividend stocks into the limelight.
NYSE’s Judy Shaw sat down with Global X’s chief investment officer Jon Maier to discuss the outlook for inflation for this edition of “ETF Leaders Powered by the NYSE.”
Maier said the firm has been focusing its quarterly reports and outlook on profitability and companies that have strong cash flows, that have been able to navigate the supply chains effectively, and can also grow their dividends.
“We’re in an interest rate environment that is rising, so bonds are an uncertain area, but quality dividends make a lot of sense for clients who are positioning plans, in light of inflation and the current environment,” Maier said.
Maier said of the April CPI reading that while the headline number was hot, core CPI — when excluding food and energy, which are more volatile — was actually below expectations, but overall, he is concerned about inflation.
“We have had a pandemic for two years, we’ve had a lot of money so consumers are able to buy a lot of goods — yet the supply issue has been an issue [for] supply chains globally,” Maier said. “China continues to have lockdowns, and that’s going to exacerbate the supply chain, and then you move on to the war in Ukraine, and that is impacting commodity prices, so that’s a concern of ours as well.”
Maier said the firm has seen elevated energy costs due to the war in Ukraine, resulting in higher cost of goods, spurring the question of whether those companies are able to pass on those additional costs.
“So that’s what we’re looking at in terms of profitability and companies that can navigate those supply chains effectively,” Maier said. “We do think higher energy costs are a concern, but the positive is it can lead us to a more creative future. How can we actually take advantage of the situation over time and not rely on fossil fuels going forward?”
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