One of the many unintended consequences of QE appears as if it will be margin contraction. As input costs surge in recent weeks it will become even more important than ever to maintain pricing power in a world of weak end demand. The analysts at Credit Suisse recently highlighted US sectors and companies who are likely to maintain pricing power in this environment as well as those that will see their pricing power deteriorate. Among the industries with pricing power:
- Rails
- Tobacco
- Paper/paclaging
- Fertilizer
- Investment Banks
- Capital goods
- Hardline retailers
- Software
- Food producers
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Those with little pricing power include the following:
- Consumer discretionary
- Machinery
- Steel
- Electrical equipment
- Chemicals
- Homebuilding
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Source: Credit Suisse
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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