Below is a chart and brief excerpt from today's Early Look written by Macro Analyst Christian Drake.

Keith highlighted the probable data procession yesterday, but I just want to reemphasize it because it will define the slope of domestic macro, in reported data terms:  

Wide-spread vaccination will pave the way for a further step function increase in employment, a prospective easing in supply chain bottlenecks and a progressive reversion lower in pandemic related goods inflation → easy comps and an acceleration in aggregate private sector income growth associated with employment gains will drive an acceleration in collective consumption capacity → the organic acceleration in income growth will be further amplified by fresh stimulus funds, a decrease in the savings rate and a drawdown in the cumulation of excess savings resulting in a domestic household spending juggernaut. 

In other words, the line in the first chart below is going to continue to rise while the (massive) bar on the right hand side of the 2nd chart continues to fall.  

Again, if all of the above sounds like a familiar refrain, that’s because we’ve been saying it for months.   

Is the emergent reflationary palooza consensus at this point? 

Yes, probably, but trying to somehow take the other side of it before:

  • It actually plays out over a multi-month/multi-quarter period.
  • When we’ve had roughly a decade of accumulated long duration/slow-flation allocations.  That doesn’t ebb, capitulate, then build in the other direction overnight. 
  • When neither the Quads nor Quant signal are pointing in the that direction.

CHART OF THE DAY: Aggregate Income Recovery | Savings ↑↑ - CoD1  Aggregate Income