The podcast features Darius Dale, founder of 42 Macro, and Andreas Steno Larsen, Global Chief Strategist at Nordea Markets. They discuss the current state of inflation, the Federal Reserve’s actions, and their impact on the market. The conversation also delves into the possibility of a soft landing for the economy and the potential for inflation to become sticky.
- Inflation Dynamics: The experts discuss the possibility of inflation stalling at levels between 3 and 4 percent, which could pose a significant problem. They predict this scenario as the highest probability outcome over the next three to six months.
- Business Cycle Dynamics: The podcast discusses the different cycles, such as the housing cycle, order cycle, production profit, and employment, and how they break down ahead of a recession. Inflation is identified as the most lagging indicator of the business cycle.
- Soft Landing Scenario: The probability of a soft landing for the economy is considered higher than the probability of an immediate recession. This is due to factors such as near-record cash on household and corporate balance sheets, limited credit cycle vulnerabilities, and limited exposure to the volatile manufacturing sector.
- Measurement of Inflation: The discussion emphasizes that it’s not the actual level of inflation that matters, but the rate of change of inflation. The Federal Reserve’s measurement of inflation is considered to be purposefully lagging, allowing for the inflationary impulse to filter through the economy over time.
- Bullish: The experts express a bullish sentiment towards the possibility of a soft landing for the economy. They believe that the probability of a soft landing is higher than the probability of an immediate recession, which is a positive outlook for the economy.
- Bearish: There is a bearish sentiment towards inflation. The experts predict that inflation could stall at levels between 3 and 4 percent, which could pose a significant problem for the economy.
- Neutral: The podcast maintains a neutral sentiment towards the Federal Reserve’s actions. While they discuss the Federal Reserve’s actions and their impact on the market, they do not express a clear positive or negative sentiment.