The markets are now betting that inflation will soon subside, allowing the Fed to pivot. But, if inflation proves persistent and not transitory, the Fed may have much more work to do, to the detriment of asset prices. There are two schools of thought on the issue of transitory versus persistent inflation. One school thinks high inflation will arrest the current inflation surge, thus proving inflation transitory this time. On the other side of the argument, the BIS warns that inflation can remain persistent in high inflation regimes as they fear we are entering.
For all these new home buyers who bought at massive house prices due to ultra-low rates…will they then get screwed when house prices normalize with ~6% rates being the norm? So like when they sell their home to move, they may be selling at a loss? Is this not a bubble waiting to pop?
Even in Argentina, a country whose very name has become synonymous with financial crisis, the current moment is dire. With inflation hurtling toward triple digits and, economists say, just a policy mistake or two away from setting the stage for hyperinflation, the central bank is desperately trying to avert a peso devaluation that would only trigger another wave of price hikes.
Just to start off pretty broad, the macro conditions are pretty much the same from what we saw earlier this year to what’s happening now. Obviously, we haven’t built any new refineries in the past few months. There’s still a war in Ukraine. Why is it that future prices are going down, and maybe not as quickly, but retail gasoline and diesel prices are also going down?