The increase in volatility, which is accompanied by lower commodity prices from oil to copper and corn makes it more difficult forecasting and management of future cash flows of companies in the S & P 500 Index, according to Citigroup Inc.
This uncertainty can lead even companies that are not manufacturers of raw materials to reduce the size of their investments and expansion that will ultimately lead to a decline in sales, wrote Citigroup and Solutions Group in brochures distributed to clients.
When the volatility of energy prices is 10% higher than the average, annual growth rates in revenue for the S & P 500 companies are likely to be 3.7% below the national average, according to Citigroup.
E.Dimitrov JrTrader
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