"Ya'll ready for this?"
(cue mood music)
From FT Alphaville:
Are commodities an inflation hedge or the opposite?Navigating a course between Scylla, Charybdis and a permabear.
Seems we’re at the stage of the sell-off where analysts turn Homeric. Here’s the latest from Goldman Sachs’ commodities desk:Macro markets today are facing a navigational challenge worthy of Odysseus. In the Greek myth, Odysseus chose to risk his ship by sailing close to the rocks of Scylla rather than risk being pulled under by the whirlpool Charybdis. In our view, policymakers are trying to navigate between the Scylla of high physical inflation today, and the Charybdis of supply constraints that could slow future growth. While it appears that much higher rates are needed today to lower demand and inflation, they may also drive a fall in capex and investment that will prolong the structural undercapacity in physical commodities and hence this environment of high headline inflation and lower growth throughout the 2020s....*****....The counter argument comes from Albert Edwards at SocGen, whose notes can often make Greek tragedy look like light relief. Predictions of a Fed-guided shallow recession are a “normal spurious landmark we pass at this stage in the cycle before all hell breaks loose and both the economy and markets collapse”, he says....
....MUCH MORE
