I strongly suspect that Ms. Holmes' delusions that she's going to pull herself out of this mess will, at long last, be dismissed when the reaction she gets to this "3 for 1" offer is the sound of crickets.
"The TRILLION dollar question is then reiterated: when does all of this “inflation as a good thing” tip over into “inflation with no growth”—aka STAGFLATION? This continues to be the chief concern of clients on recent marketing swings."
"If the border adjustment mechanism is implemented as proposed we think it will cause a global depression and a major equity market decline. It is still unclear whether it will happen but at the very least we expect that US trade policy will put downward pressure on global growth. When this becomes apparent commodities will correct meaningfully and we will reinvest in inflation beneficiaries."
Business activity in the US Services industry accelerated to its fastest since Nov 2015, according to the 'soft' survey data from Markit, but some firms noted that squeezed margins had acted as a brake on employment growth at their business units in January. ISM Services slipped lower with unadjusted new orders tumbling to their lowest since Jan 2016.
The specter of global stagflation is looming ever larger as inflation across the world is beating analysts’ forecasts (even before the potential effect from Donald Trump’s economic policies) but economic growth expectations remain stagnant.
The post-election movements of U.S. stocks have been heavily influenced by policy. First they soared, then they traded in a narrow range. Now, Mohamed El-Erian warns, the markets have entered a period of greater volatility underpinned by a tug of war between the expectation of reflationary policies and the risk of stumbling into stagflation. Where we end up will be predominantly a political call.
“Nationalism, protectionism and militarism increase global tensions and the risks of conflict. For these reasons, while we remain open-minded, we are increasingly concerned about the emerging policies of the Trump administration,”
"Trump is a boost to volatility traders because of his inherent unpredictability... stop underestimating this man... All bets are off, and that is very good for volatility… but potentially very turbulent for the world."
As President Obama held his last press conference this afternoon, basking in the warm afterglow of an over-sampled poll showing his favorability near record highs, it would appear he (and the press corps) forgot to mention that for most Americans - the 80% in production and nonsupervisory roles - this morning's data showed real wages actually dropping for the first time since 2013. Not exactly the rosy picture of economic growth being spun by the media as Obama transitions to Trump.
Having spiked exuberantly in November and December following Trump's election, Empire Fed's manufacturing survey limped lower in January, missing expectations, and was revised lower as Trumphoria fades.
Here comes stagflation. Turkey's biggest headache, its crashing currency, will soon translate into another major problem. According to two senior economy officials, inflation could reach double digits in the first quarter for the first time in almost five years as a result of the lira's falls, even as the government's budget deficit just hit a record high.
"The driver for the acceleration of ‘reversal trades’ yesterday into the overnight was the Barnum-esque circus of a press conference yesterday from President-elect Trump. Expectations were built for a more “Presidential” tone, with more granular ‘policy talk.' We got a “goat rodeo” instead, and it spooked a lot of the TACTICALLY long reflation crowd."