Fat-Cat Margins Make S&P a High-Value Target in Inflation Wars

by Vildana Hajric - Wed, November 30, 2022

David R. Kotok - In the News


Excerpt from Bloomberg follows:


Proposals to rein in Corporate America’s profits, like the windfall tax that President Joe Biden wants to slap on oil drillers, are easy to dismiss as bluster. And yet, they’re an uncomfortable signal for corporate executives and shareholders: Record margins are coming up for blame in the inflation surge squeezing middle-class families.

Seemingly unending price increases can heighten voter anger, putting pressure on politicians to act. President Richard Nixon in 1971 instituted a short-term freeze on prices and wages. It was, as Art Hogan, chief market strategist at B. Riley Wealth, put it, a disaster. Inflation kept climbing until the Federal Reserve finally jacked up interest rates to cool the economy.

Companies are also, in such circumstance, hindered from making capital-investment decisions, said David Kotok, chief investment officer at Cumberland Advisors.

“What you do as a business enterprise is you postpone the long-term decision because you don’t know how to deal with it or how to price it. It’s a shame that we’re doing that,” he said. “Price controls, they didn’t work and history shows that they never really do.”


Read the full article here: https://finance.yahoo.com/news/fat-cat-margins-p-high-120000683.html


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David R. Kotok
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