One Bank Lays Out How Markets Will Descend Into A Stagflationary Hell

Tyler Durden's Photo
by Tyler Durden
Saturday, Jul 17, 2021 - 12:44 PM

Two months ago, when Wall Street still looked at the bright future with hope of perpetual growth and muted inflation, and when nobody dared to even breathe the word "Stagflation", BofA's Chief Investment Officer broke from the crowd and in one of his closely followed Flow Show notes, warned that stagflation is coming, predicting that in the "second half of 2021 the market will discount stagflation: while fiscal & monetary stimulus is peaking, the acceleration in wages ominous as it is a catalyst to simultaneously raise interest rates & cut corporate profits."

Fast forward to today when in his latest Flow Show, Hartnett pulls no punches and writes the inflation that marked the first half is transforming to stagflation in the second (something we discussed most recently earlier today in "Explosive Inflation Leads To Record Collapse In Home, Car Purchase Plans").

But before we dig into his note, here is Hartnett's snap analysis of the bull and bear case in under 30 words: