Below is a chart and brief excerpt from today's Early Look written by Macro analyst Christian Drake.
|
At the end of the day, the Quad and allocation discussion will probably hinge on the slope of the inflation line into 4Q21 (see Chart of the Day below). If the demand-supply imbalance in the goods economy continues to flow through prices at the same time that a similar imbalance begins to take more conspicuous shape in the services economy then that line may inflect higher, and with stagflationary consequences. And if we layer another few trillion in fiscal spending on the demand side to any already supply bottlenecked and production constrained economy, the primary impact may flow primarily through prices, not real output. Quad 3 carries a decidedly different allocation blueprint. Stay tuned. |
