Markets mixed, inflation a “time bomb”

Markets were mixed on Monday.

The S&P 500 fell 0.1 percent but the STOXX Europe 600 rose 0.2 percent and the Shanghai Composite rose 0.2 percent.

Inflation remains a concern among investors, despite the Federal Reserve having expressed the view that its rise is likely to be transitory.

Deutsche Bank economists have warned that inflation is likely to persist and lead to a crisis in the years ahead.

“It may take a year longer until 2023 but inflation will re-emerge,” said the Deutsche economists.

The economists added that “neglecting inflation leaves global economies sitting on a time bomb”.

Most other economists are more sanguine.

For example, Jan Hatzius, chief economist at Goldman Sachs, said that wage pressures and other inflationary pressures are likely to ease.

“All this suggests that Fed officials can stick with their plan to exit only very gradually from the easy current policy stance,” Hatzius wrote.

That could mean more stock market gains.

“I’m pretty optimistic about U.S. equities,” said Adam Parker, founder of Trivariate Research.

“The basics are extraordinary earnings growth, a strong economy, low interest rates,” said Ed Keon, chief investment strategist at QMA. “That makes for a bull market.”