General Discussion / Social Media, page-5192

inflation and rising rates go hand in hand
central banks raise interest rates to try and curb the rising costs of goods to prevent "runaway inflation"- this us what we are seeing
I am perth based; have seen massive jump in rental prices over last 18 months; massive rise in many staples goods like butter, bread, pasta
repeated raising of interest by central banks aimed to " reduce demand from consumers of these goods"
a basic supply and demand model if you decrease demand of a good you decrease price of that good. central banks are trying to decrease demand- ie with rising rates bank loan payments rise; if wages dont rise it means less money for consumer to spend on goods and this causes reduced demand and this then is meant to slow the rapidly rising prices (runaway inflation)

to a previous posters comment rising interest rates also mean rising rates to borrow and if you assume short term a company has fixed costs and returns this means less profit to the company (ie less likely to achieve profitability- not really an issue since ALC is self funded and no debt- a very good thing)- however if you think about the rising costs such as massive rise in airline tickets then the cost of doing business and reps and managers travelling goes up. hotel prices are expected to surge. as example in honolulu hotel prices surged 252% from 2019 to 2022 with a 30 % rise expected across most major states in US; same for Oz and UK; this increases costs of doijg business for reps travelling
another example Amazon AWS cloud prices are surging with higher prices oct 2022 announced and more to follow; any tech company putting their stuff in the cloud if a subscription model will mean higher supply side prices for alc; i dont know if ALC is rising their pricing?

and also yes the rising rates means rising bond yields - guaranteed return. like in the US where the 10 year US bond yield gas gone from 0.8% in 2020 to 3.8% today start 2023(nearly 500% rise) - this shifts large investment from high risk growth to value stocks and low risk investments

the rising inflation and war in ukraine and covid has placed uncertainty on future growth of all mkts that we might be goijg into a major recession/ depression event