The bear flattening impulse seen across global bonds to start the week felt ominous. If we are, in fact, seeing a policy pivot from pro-growth to anti-inflation (as BofA's Michael Hartnett put it last week), it'll have ramifications for equities and risk sentiment more generally. In short, we may now be beyond good reflation and into bad inflation. "US equities are increasingly becoming negatively sensitive to rising inflation expectations, as prior 'feel good' acceleration higher in growth a

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7 thoughts on “‘Bad-flation’

  1. Let me start by saying I don’t want to sound like a conspiracy theorist.

    That being said, the fed is run by some very well educated people with claims on being smart/astute.

    They are aware of the side effects of their tools (namely asset price inflation and the effect it has on the bulk of America). They are also among the richest people in our country with connections, both personal and professional, to other incredibly wealthy individuals and corporations. Those individuals and corporations are much better off (financially at least) in large part due to fed policy.

    If the fed toolbox is ineffective at combating the outcomes it’s tasked with are we to assume fed officials are oblivious to this? If they are not, why would they persist in this charade?

  2. Perhaps I am oversimplifying but it seems to me the labor “shortage” caused by millions of at least temporary labor force participation dropouts is a primal cause to the supply chain mess. Hundreds of thousands of unloaded containers rest off shore because our docks need workers to unload them, extra shifts in which to do the unloading and truckers to get the goods on the roads. The industry needs tens of thousands of experienced truck drivers to get the show on the road. It seems to me that folks are dropping out not because the Democrat socialists are giving them incentives to stay unemployed. That’s over and still we have 6 mil that used to be in the LF, and expected to return, who don’t really seem interested. They are more willing to “bet on themselves” and do gig work when they need some money. I think people are just tired of working. Truckers, production workers, construction workers, service providers and other such laborers can’t work from home, as they see their neighbors doing. What they have to do is real, often difficult and mostly inflexible. People want something else and seem to be willing to wait to find out what that something is. Trump did nothing concrete for these people. Meanwhile our country is degrading at an ever increasing rate, socially, in its infrastructure, and most of all in its character. Seriously, a huge proportion of our sitting Federal Judges (lifetime job, by the way — can’t be fired) are engaging in insider trading, getting rich and trying to pretend that someone else is actually doing this, they had no knowledge it was going on, and they will seek options to phase out this type of behavior real soon now. Increasingly, most our leaders are engaging in criminal acts, prevaricating, dissembling, and generally passing the buck while blaming others for their misdeeds and getting rich at our expense (at least the third of us who actually pay our taxes). The US is a hot mess of greed, selfishness, and generally bad behavior. We are no longer global leaders of anything in any sense (except maybe in self-delusion).

    1. Perhaps the decades of devaluing labor and reducing its power and benefits have finally hit home for those expected to maintain the supply chains. Executives have gotten incredibly wealthy and have been held to no account and yet “we” (the royal we) expect laborers to sacrifice themselves on the altar of capitalism to earn meager wages and die younger than they should. By the way, using the term “Democrat socialists” is very Fox Newsy of you and it also reveals how politically wired you are in your thinking. I say this not to counter strike but to perhaps provide you with you a mirror so that you can reflect on if you want to be a programed robot of corporate media or actually think for yourself and not be a pawn to the billionaire class.

      1. cdamworth: IMO your critique of Mr Lucky’s comments is completely misplaced.

        Seems you’ve misconstrued implications of his use of the term Democrat Socialists; i fault him only for failing to put that much-exploited phrase in quotes, as you’ve done.

        His commentary throughout and especially in his final sentences is spot-on. Nothing there reveals any latent Fox-indoctrinated analysis. You need to reread what he’s written in that revised context w/ the suggested added “”.

        Then maybe even offer an apology for so completely misconstruing his intent and the depth of his analysis of this as a flailing/failing nation; one seemingly hell-bent of self-destruction that will benefit only the very few, and not, as he also observes, its so easily-led neo-serfs

  3. Damned if you do damned if you don’t, I’m not sure how the Fed and other central banks get out of the mess they helped create without actual support from the fiscal channel, sadly that looks less likely by the hour. I can trade a bear flattener, a bull flattener or any rate expectations combo, chances are I’ll be fine regardless, but it is truly disheartening to see the lack of courage from our legislators and the real possibility of a policy mistake by the Fed, nothing will change, they’ll engineer a recession and we’ll have an inverted yield curve again in 3-4 years, so much for change. With no inflation, reflation or spending perhaps Manchin will be happy in coal infested WV, with deflation rampant again and folks poorer than they used to be.

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