The bond market stabilized after a huge sale and this gave comfort to the shares. Nasdaq Composite, dominated by technology
COMP
has advanced for six of the last nine sessions and Russell 2000
GROOVE
rose 2.2% to bring low-cap index earnings to 35% since the US election.
Will the silence continue? Manoj Pradhan, former CEO of Morgan Stanley responsible for the global economy and founder of Talking Heads Macroeconomics, said in a presentation by fund manager Tabula Investment Management that inflation will heat up even as the Federal Reserve expects to cool. , next year.
Pradhan argued that the breakdown of the Phillips curve – the traditional relationship that shows inflation rising as unemployment falls – occurred because of China’s entry into the global labor force. But she said COVID-19’s demographics and pandemic would fix it.
First, to demographics. The aging of the US population and the developed world will mean a loss of workers, and an aging population will also create an increase in government spending. Pradhan also mentioned that caring for the elderly will be labor-intensive. “We need technology to destroy jobs in other parts of the economy so that the workforce it releases can be reallocated to the care of the elderly, at a similar level of skill,” he said.
On the pandemic. Right now, he said, the money supply signals are giving “the most extreme signals you’ve ever seen.” It has not translated into inflation now, as the speed of money has plummeted and the rate of savings has risen, with both consumer functions closed at home. Citing European Central Bank research, Pradhan said growth savings are “forced” rather than “preventive.”
As the economy normalizes, forced savings will act as a delayed stimulus. Even now, the real estate market is on fire, with prices rising around the world. “This is a way of spending that can attract some of the surplus work,” he said. But rising house prices do not appear in official measures of inflation.
The Fed is already trying to address the challenge of the next inflation readings, which in May and June may show gains of 3.5% to 4% year-on-year. “I will tell you that anything over 3.5% -4% will create a significant breakdown of correlations [between stocks and bonds], because people have not seen inflation in a big way in advanced economies in the last 30 years, “he said.
“The real challenge will come in 2022, when a lot of spending will be placed on goods or housing, monetary aggregates will continue to increase with speed,” he said. He expects the yield curve to continue to be absorbed and that if the Fed implements another Twist operation or yield curve control, it will push inflation even further.
Asset returns will be harder to extract, inequality will decline, but amid weak growth, and central bank independence will be increasingly threatened, he predicts.
WeWork deal
WeWork’s shared office provider has agreed to merge with a special procurement company BowX Acquisition Corp.
BOWX
at a valuation of $ 9 billion. The Wall Street Journal reported that media startups Axios and The Athletic could merge and then go public with a merger with a SPAC.
The Ever Date container ship is still stranded in the Suez Canal, disrupting trade by about $ 10 billion a day.
L marks
pounds
He raised his earnings outlook, citing sales trends that are expected to be driven by changes in consumer spending patterns resulting from government incentive checks, a relaxation of COVID-19 traffic restrictions and other factors.
Friday’s data calendar includes personal income, consumer spending and the PCE price index for February, as well as preliminary analyzes of trade and stocks.
The Fed said the temporary limits on dividend payments and share buybacks will end for most banks after June 30.
Another day up?
US futures
ES00
NQ00
indicated a quiet start as the 10-year Treasury yield
TMUBMUSD10Y
increased to 1.67%.
Crude oil futures
CL.1
they were approaching $ 60 a barrel, while the dollar
DXY
it was constant.
Random readings
NASA is preparing to fly a helicopter over Mars.
Nothing like the pandemic to inspire competition for the all-important warehouse of the year.
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