We know we face months of physical disruption to energy and food markets. Inflation will keep getting worse. The question is whether risk assets will care, if the underlying conflict has been resolved. I suspect not...unless the economy deteriorates in unexpected ways.
@spx.fyi you know I cant reply to your posts, right? Or were the questions rhetorical?
It looks like the economy was reaccelerating, before this administration f***ed it up... again
sad I missed this speech from the BoE's Chief Economist - looks like another cracker
who would say such a thing?!
happy anniversary 🍰
yes
My personal view - more soft patch than recession. But we gotta watch labour markets closely. There is a simple reason markets hate recessions - the "non-linearities" that come with them. Once the recessionary process starts, nobody knows when it will end. That is the scary part for markets.
bear: Physical disruption to energy will continue for months, so oil price could grind higher (demand vs supply, not risk premia). Even if the initial hit to profits is one-off, the corporate response could make the situation worse - if they start cutting employment. Recessionary dynamic kicks in.
This is the debate.
Bull: higher oil price raise inflation and reduce LEVEL of income/profits. But even if oil prices stay high, impact on GROWTH wears off. Soft patch. & since we know what caused it, as long as the conflict has ended, markets can look through the fallout. Like a natural disaster.
heated debate on our weekly analysts' call today. If the conflict ends but we still face months of physical disruption to energy markets - is anyone still going to care?
If Italy fail to qualify for the world cup tonight, Gattuso should just declare victory and say the real objective was to play an extra couple of qualifiers 😉
Got AI to do some analysis on the bond-equity correlation & the procyclicality of inflation. The results were amazing - far more impressive than any of my previous work. Then I checked the underlying analysis and it was all bullshit. Literally made up the data, then lied about it
👀
robertlind529294.substack.com/p/how-not-to...
If this Trump administration has come in and done literally nothing, just played golf the entire time, the economy would almost certainly be in better shape right now.... growth would be higher, employment would be rising and the deficit would be smaller. 12 months of total chaos
modern central banks - the guardians of neoliberalism
This is one of my favourite charts. It shows how the economy emerged from WW2 with a lot more worker power.. and then post-1979 neoliberalism crushed it.
sorry folks, we aint gonna get another wage-price spiral
fortnightly
Very different market response. US equities dropped 20% at the start of the first Gulf War, and then recovered as soon as it was over - even though the economy was still sliding into recession.
This time we just wanna look through the entire conflict. GLWT
PODCAST TIME:
1) How the war has changed the macro outlook
2) Lessons from 1990 (I'm obsessed with these parallels rn)
3) Are the Europeans seriously going to hike rates (again)?
apple: podcasts.apple.com/us/podcast/r...
spotify: open.spotify.com/episode/1Yhf...
@spx.fyi you know I cant actually reply to any of your posts, right??
I was obsessed with F14s around that time. Top Gun...
Try reading them from the 1970s. They're a hoot!
ive got that book on my desk
I was a child in 1990. This is the thing I remember most - the only war in history with its own sticker collection (!). Panini should consider bringing this back seeing as Italy cant qualify for World Cups anymore...
Sad I know, but i love reading old FOMC transcripts. The transcripts from 1990, after the first gulf War, are fascinating - and kinda humbling. Economy is resilient.. its a soft patch... ok, just a1-2 quarter contraction... oops
This is the largest oil supply shock in history in mb/d
The enemy gets a vote. Iran is now delivering pain to Trump via multiple paths
(1) Gulf Kings
(2) Financial meltdown
(3) AI tech oligarchs
(4) Fuel, fertilizer, food disruptions
Read our Polycrisis Dispatch:
buttondown.com/polycrisisdi...
i assume its a nice round number? 120 $/bbl? 150 $/bbl?
its funny (to me) that the ECB obviously looked at the BoE statement today and thought "OK, lets not do anything THAT crazy".
The BoE... making the ECB seem sensible
you know its a crisis when all you can do is stare at markets and the news flow.. and any actual analysis seems kinda pointless 🤣