Teal Linde's Top Picks: November 15, 2021
BNN Bloomberg
Top picks from Teal Linde, manager at Linde Equity Fund
Teal Linde, manager, Linde Equity Fund
FOCUS: North American mid and large cap stocks
MARKET OUTLOOK:
In 2021, there has been virtually no stopping stock markets in their relentless quest for new highs. But, together with these new market highs, we have seen consumer price inflation to a degree not seen in decades.
To some extent, higher consumer prices and stock prices are being caused by the same thing – vast asset purchases by central banks, which print money to finance huge government deficits, thereby creating vast sums of less valuable money. To be clear, inflation is being influenced by supply side factors too, such as recent underinvestment in production, storage and transportation capacity, labour shortages caused by an aging population and a misalignment between workers’ skills and employer needs and increasing international trade tensions.
Fiscal and monetary stimulus has caused retail demand to be roughly 15 per cent higher today than it would likely have been if the pandemic had not occurred and supply is having a hard time keeping up with this supercharged demand. For example, if retail demand for services rises 15 per cent, you need 15 per cent more people to deliver the services to keep prices stable. There is insufficient excess labour capacity to fill these needs and resultingly job openings now exceed the number of unemployed, which is inherently inflationary, as prices must rise to increase supply and reduce demand.
