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Excessive inventories

Aug 16, 2022

As stock markets are climbing up the wall of worries and continue to recover, economic clouds are rapidly forming on the horizon. The latest news out of China was worrying enough to compel the People’s Bank of China to cut interest rates in a surprise move. In the US and Europe, excessive inventories appear to become the new “buzz word” during quarterly earnings calls. It may be another positive sign inflation starts easing off but is certainly a worrying sign in terms of slowing economic activity. We therefore continue to believe that earnings will start to slow down and stay extremely selective in investing only in undervalued quality businesses.

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