‘That Light At Tunnel’s End Was Actually A Train’
"Now, [it's] clear that light at the end of the tunnel was actually an oncoming train," Nomura's Charlie McElligott said Monday.
He was referring to optimistic assumptions about "peak inflation" in the US and what it might mean for Fed policy.
Last week's disastrous CPI report dispelled the notion that inflation is on the brink of turning lower. If it's the monthly prints that count (and it is), there's no sign of relief (figure below).
A new record low on the headline University of Michiga
I got an email this morning from Celsius, a crytpo lending platform I looked at but never invested with, is pausing all “withdrawls, Swap, and transfers between accounts”. Yeah, your prophetic post about how Crypto might end really seems like it might become a reality very soon.
And the piece I read this AM also said the price of the Celsius token has fallen to $0.20.
Need to consider scenario where Fed tightening fails to suppress inflation such that Fed has to choose EITHER continuing tightening and driving economy into significant recession + job loss + financial crisis + social upheaval OR abandoning inflation fight to (maybe) avert significant recession et al. The first might be called “Volcker redux” and the latter “Miller redux”. Which do you think Fed will choose? If former, the traditional recession portfolio playbook may be a good starting point. If latter, look for what works in high inflation environments BUT after a decade of one-way equity market w/ increasing concentration and passive domination, might speculate that the “works in high inflation” names have been reduced to small weights in indicies. Will they have enough market cap to gracefully absorb capital inflows? If not . . . the implications for one’s security selection criteria and process are interesting.