Higher interest rates and lower leverage are a double whammy for stocks, according to Kostin. Markets InsiderThe result has been lower ROE across the market this year. Goldman SachsKostin broke that decline down even further, noting that, of the 69 basis-point decline this year, 31 basis points were directly attributable to higher interest expenses. "Reduced leverage, lower asset turnover, and a contraction in EBIT margins also weighed on S&P 500 ex-Financials ROE, contributing -42 bp total." Today, Kostin sees speed bumps ahead in the form of higher interest rates and deeply rooted inflation, which might stick around thanks to higher oil prices.

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Persons: Goldman Sachs, David J, ROE, Kostin, Goldman Sachs Kostin, Financials ROE, Berkshire Hathaway, Jerome Powell, sector's ROE, Brent, it's, that's Organizations: Financials, Energy, Berkshire, Brent