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B. G., Opalesque Geneva: The macroeconomic landscape is flooded with crosscurrents, according to Francis A. Scotland, director of macro research at Brandywine Global, what with a rising S&P 500, optimism about artificial intelligence, the Ukraine war, climate change anxiety, oil prices threatening to rise, the underwhelming reopening of China, budget deficits and political polarisation in the U.S. But he thinks the macro factor that still matters most, at least for now, is inflation.
"Inflation has been in retreat since peaking in June 2022 and is the main macro trend currently lending support to both bond and equity markets. The critical question for investors from here is: how low will it go? Can it retreat back to the Federal Reserve (Fed) target and validate rate cut expectations? Or will it get stuck above the goal range, forcing the Fed to keep rates high - or higher as some forecast - and risking a credit crunch and the economic recession so many are predicting?"
The pandemic lockdown bust triggered a massive policy reaction that fuelled a boom in cryptocurrencies, equity markets, real estate, the economy, and ultimately inflation. But as booms are followed by busts, then came policy reaction. The federal fund rates rose, money supplied dropped, and the crypto markets, among others, suffered. Real economic growth in the U.S....................... To view our full article Click here
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