We’re officially one week into what will likely evolve into a major banking and financial crisis. Understandably, there are comparisons to the Lehman collapse. Such analysis doesn’t seem as lunatic fringe after this week’s upheaval in Europe.
A collapsing Bubble fixing Beijing’s sights on Taiwan. It’s a scenario I’ve feared for years. I just never imagined China and Russia as “partners without limits” in a fragmenting world of economic and military alliances.
Doug writes: So, why would risk premiums and indicators remain sanguine in the face of a yield spike and hawkish reassessment of Fed rate policy? Phrased differently, what is holding back “risk off” dynamics? A Friday evening Bloomberg headline: “Blaring… Read More ›
I believe the world is transitioning to a new cycle. Expectations that inflation conveniently returns to previous cycle dynamics is wishful thinking. Hopes that central bankers can quickly conclude tightening cycles without the need to inflict pain are unrealistic.
Powell Wednesday needed to push back firmly against speculative markets, against the legacies of Greenspan and Bernanke. After printing $5 TN, he should have demonstrated a modicum of policy symmetry by at least leaning against the “echo Bubble.” It was astonishing to see Powell instead throw fuel on a major short squeeze and dangerous market instability.
If the Fed and global central bankers relax with inflation in the five to six percent range, it will likely spike back toward double-digits during the next inflationary shock. This is no time for Inflation Complacency.