Investment Outlook November 2021

  • Written By: Daniel Casali
  • Published: Thu, 04 Nov 2021 12:30 GMT

In the November issue, we assess the likelihood of stagflation and the potential consequences for stock markets.

Click on the below icons to Read, Listen, Watch or Download the issue.



Read in detail this month’s round up of global markets, trends and insights.

Podcasts 1920 Pa


Listen to Cherry Reynard interview Daniel Casali in this month’s podcast episode.

Download Icon


Download a copy of this month’s round up of global markets, trends and insights.

Download PDF


Investment Outlook November 2021: No time for stagflation in the UK

Surging energy prices have contributed to inflationary concerns, at a time when economic growth momentum is weakening. This has led to concerns over potential stagflation, where inflation pushes prices up faster than wages and profits, forcing consumers and businesses to cut back on expenditure.

Previous episodes of stagflation have been bad news for stock markets. The last time developed countries experienced stagflation was in the period 1973 to 1982, following a series of oil shocks. US stocks performed particularly poorly over this period, declining at an annualised rate of -1.5% after inflation.

However, stagflation remains only an outside possibility. Strong GDP growth is allowing firms to pass on higher input costs to consumers without denting demand. The trade-off between growth and inflation is still favourable for fundamental company earnings, which – ultimately – are the key driver for share prices.

There is little evidence that overall company profit margins are being eroded by rising input costs, such as raw materials and wages. The UK MSCI forward profit margin (as a % of sales) has continued to trend upwards since its trough in June 2020. Recent macro data shows that the UK economy is weathering the supply squeeze well.


Download PDF

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.

Please remember investment involves risk. The value of investments and the income from them can fall as well as rise and investors may not receive back the original amount invested. Past performance is not a guide to future performance.

Ref: 120621eb

Return to Investment Outlook



Cookie Settings