Fortuitously, we’ve done The Work and will be presenting a very detailed and robust framework for how to contextualize margin compression risk through the lens of the wage cycle. The three primary factors are:
Within the context of this framework, Tech and Financials are most at risk of margin compression from a Sector perspective, while Airlines, Capital Markets, Communications Equipment, Electronic Equipment & Components, Multi-Utilities, Road & Rail and Semiconductors are most at risk from an Industry perspective. Layering on the absolute level of wage growth and associated momentum as final factors is largely confirming of this view.
Stay tuned for more details on our 10am ET webcast/conference call titled, “Jump Conditions In Wage Growth Are Right Around the Corner”. Please email firstname.lastname@example.org for access to the webcast/conference call or a link to the replay to the extent you cannot catch it live. You will not want to miss this.
Also presenting are Hedgeye Sector Heads Neil Howe (Demography), Brian McGough (Retail), Howard Penney (Restaurants), Todd Jordan (GLL), Josh Steiner (Housing) and Tom Tobin (Healthcare); each will detail the impact of rising wages on their sectors.
Humor me for a moment: what if the same guys that helped you appropriately risk mange the carnage of ’08, buy the bottom in ’09, front-run the summer swoon of 2010, position for stagflation in 2011, position for accelerating growth in 2013, position for deflation in mid-2014, position for rising recession risk in mid-2015, get long of momentum and growth in late-2016, stay long throughout the many mini freak-outs of 2017 and told you to short sell the consensus “Globally Synchronized Recovery” narrative at the start of 2018 are right on the upcoming phase transition as well?