Goldman Sachs warns of supply pressures in European economies By Investing.com

The key read-through is not just “sticky inflation,” but a widening transatlantic growth and pricing divergence that favors nominal winners over real-economy cyclicals. When supply constraints start showing up in both manufacturing and delivery metrics while output prices lag input costs, margin compression is usually the first-order effect for manufacturers, but the second-order effect is more important: central banks get boxed in, so curves can steepen at the front end while longer-duration growth assets get a relative bid only if rates expectations stay anchored. In Europe, that is a tougher setup because the activity deterioration is happening alongside worsening supply conditions, which is the worst mix for industrial earnings and small-cap domestics.

The UK looks relatively stronger on activity, but the same supply-pressure signal means the outperformance may be more stagflationary than bullish. That tends to benefit firms with pricing power, regulated pass-through, or balance-sheet optionality, while punishing rate-sensitive consumers, transportation, and input-heavy manufacturers. Energy-linked equities are a subtle beneficiary because any supply shock narrative increases the value of secured energy exposure and often supports forward power/gas pricing, even if the macro impulse is ultimately growth-negative.

The main near-term catalyst is whether these breadth measures translate into actual hard-data deterioration over the next 4-8 weeks; if they do, consensus will likely have to cut industrial earnings and European GDP estimates. The contrarian angle is that the move may be over-read as outright demand weakness: front-loading and inventory build can mask underlying stability, so the first leg could be a margin event rather than a volume event. That argues for owning beneficiaries of pricing power and shorting the most leveraged, cost-sensitive names rather than making a blunt bearish macro call.