Inflation has come down a great deal from its peak, but what if that disinflation turns out to be transitory?
Certainly, there are important dynamics in commodities markets today that threaten to make the Fed’s job much harder.
In addition, a rising dependency ratio represents a structural tailwind to the inflationary impulse.
Meanwhile, the inflation already incurred by the economy may soon threaten the integrity of the “soft landing” narrative.
Of course, the message from the bond market has not wavered. And, unlike economists, it has a perfect track record.
Perhaps it’s time for the “stagflation” narrative to make a comeback.
This is a Hedgeye Guest Contributor piece written by Jesse Felder and reposted from The Felder Report blog. Felder has been managing money for over 20 years. He began his professional career at Bear, Stearns & Co. and later co-founded a multi-billion-dollar hedge fund firm headquartered in Santa Monica, California. Today he lives in Bend, Oregon and publishes The Felder Report. This piece does not necessarily reflect the opinion of Hedgeye.