Stagflation: ‘Why Do I Care?’

Stagflation: ‘Why Do I Care?’

You can scarcely visit a financial news portal in 2021 without coming across an article about stagflation. I'd say "you can scarcely pick up a paper," but nobody reads physical papers anymore. Well, almost nobody. There's an old bond trader in my neighborhood who does. I've mentioned him in these pages before. He has chronic back problems, so he can barely walk. Every evening, he takes a folding chair and makes his way to the beach. For the able-bodied, it's a two-minute walk -- you don't even
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9 thoughts on “Stagflation: ‘Why Do I Care?’

  1. I’m old and an inveterate fixed income investor, treasuries, corporates,munis, leveraged loans, distressed debt, deep discounts, whatever. I’ve had 65-80% of my money in this stuff since the late 70s. Made way more money doing this than buying blue chip stocks. I started reading the WSJ (in paper) daily in 1967 and have never stopped. That paper has always been printed on the best newsprint since I can remember. Wouldn’t think of not reading a newspaper daily (read three, two on my computer).

    I don’t watch guys like El-Erian on TV but whether he’s always right today, he was right often enough to get actually rich so I can’t fault him totally.

    1. My wife and I still pay for home delivery of the NY Times, seven days a week. Used to be maybe ten of us in this 50-unit building who did; now (despite the ever-increasing price) we’re the only ones. The way I look at it, it’s cheaper than a divorce settlement.

  2. H- Damn fine writing , as usual. Your neighbor reminds me of a country risk review I attended back in the day. The presenter was droning on about how, “in ten years, Bahrain will exhaust its oil supply”. The chief officer, close to retirement, had his back to the room, drawing a cup of coffee. Without missing a beat, “ In ten years, I’ll be part of the oil supply.”

  3. H-Man, equities can only handle so much in rate increase before they puke. Right now those rates look like they can go much higher. I guess we wait and see how equities respond when 10’s start to close in on 1.80 which could happen before the end of the year. At some point there will be the proverbial straw that breaks the camel’s back.

  4. When your child is suffering from intolerable and severe pain that deprives them of their sanity, it is almost impossible not to administer an opiate, even when you know of the horror that might await you down the road.

    The group of people known as The Fed, will not be able to withdraw support if pain levels rise too high as a result thereof. No need for total withdrawal, anyway, as the US/USD only has to stay slightly more responsible/less managed than other developed/significant countries/currencies.

    If necessary, why wouldn’t the Fed buy ETF’s? After all, the BOJ, after a 9 year buying spree (just recently paused but not ended), is now the largest holder of Japanese ETF’s at approximately $400B. The Nikkei 225 went from 10,800 to over 28,000 during that 9 year period.

    1. b/c if we totally give up on the illusion of a capitalist system, how does one morally justify such an unequal distribution of wealth? If it becomes crystal clear to even the uninterested that the main success factor is proximity to the money spigot, I can see fascism in our future in bright bold red letters…

      The BOJ should start selling its ETFs, see if the system can take it.

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