Um you've been banging on you know Banging the drama about the fed being Too late is a recession at this point Now unavoidable in the u.s it is not Unavoidable but unfortunately the Probability is going up what is Unavoidable is stagflation And we're seeing growth coming down and We're seeing inflation remaining high And the fed is finally catching up to Developments on the ground but it still Has some way to go okay so if you look At stagflation what does that mean for Stocks how much of it is already priced In that or how much more volatility will We get so we've gone sequentially Through pricing in inflation risk and Interest rate risk to pricing in tighter Liquidity what we haven't priced in yet Is a significant slowdown in growth so We are Mostly through the adjustment but not Quite there yet i think that's probably Another leg to come What does this mean for the u.s consumer They're not are they strong enough to Withstand this for a couple of quarters So the consumer in general is they still Have significant savings that were built Up during the pandemic with all the Transfers from the fiscal side but the Issue francine is distribution There are very vulnerable segments of The population
And so far we we haven't seen enough Being done to protect them Stagflation is also i guess every Central bank's worst nightmare when you Look at the situation in japan i mean They were stuck in this for a long time Is the u.s or the world becoming more Like japan or is it a you know stagflate A transitory stagflation environment So that is really hard um to project at This time stagflation is the worst thing For central banks Especially for the fed because it puts Its two objectives in conflict with each Other And that's why a lot of us wanted to Avoid the situation and this situation Was avoidable That's what what sort of upsets a lot of Us it was avoidable had the fed not Stuck to its transitory inflation Characterization Now that we're here It is very hard to find the first best Policy outcome so the fed is going to Have to make a very difficult choice Um you know a lot of people say it needs Luck and skill well it needs a lot of Luck at this point
