(ZEROHEDGE) – One doesn't have to go too far – a trip to the local gas station, grocery store, or restaurant should suffice – to observe how soaring commodity prices and other costs are bleeding through to the consumer. And it's only going to get worse: Procter & Gamble, Kimberly-Clark and Coca-Cola have publicly discussed lifting prices, citing rising commodity costs and manufacturing expenses. P&G and Kimberly-Clark’s higher price tags for everyday items like toilet paper and tampons are the first in about two years, as the trade war unfolded, further adding pressure on raw materials.
Cost pressures are certainly appearing in company earnings commentaries: while it is still early on in earnings season (less than 10% of S&P 500 companies have reported), Morgan Stanley notes that cost pressures have emerged as a prominent topic of discussion. This development is corroborated by a number of macro data points which suggest that a range of expenses are on the rise.
Such surging cost pressures have been best captured by the record prices prints in PMI survey data. The NFIB Small Business Optimism Survey also indicates that companies intend to raise prices in response to these cost pressures. With a strong, demand-led growth environment, Morgan Stanley's Micheal Wilson writes that many companies will ultimately look to pass along price, but on a more near-term basis the strategist is watching how stocks trade as cost pressures impact results relative to expectations.
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