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I asked @LHSummers today at #WSJCEOCouncil what the odds were now. He sees 30% to 40% probability of recession starting in next 24 months. Soft landing (third option) now just 20% to 25%...(implicitly stagflation 35-50%)...
I noted 10y yields are lower and 5y5yforward inflation breakevens roughly similar to in spring. Summers said: "I think in part that market forecast is wrong. & ... technical factors ... including QE ... rebalancing towards fixed income ... by pension funds... foreign flows."
.@LHSummers says another reason for low yields: "People expect that sooner or later and in some way, possibly involving a serious recession, inflation will be beat out of the system."
"We don’t know that Putin has made up his mind to use force but what we do know is that he’s putting the Russian military…in a place where they could act in a pretty sweeping way," CIA Director Bill Burns says at #WSJCEOCouncil
"I would never underestimate President Putin's risk appetite on Ukraine," Burns says, adding this winter "he may see a more favorable landscape with major European allies who are, in his eyes, distracted with the transition" - citing Merkel's departure and French elections
For Putin to act militarily is not "a foregone conclusion at all," Burns says. "That's why it's so important to respond to that with a pretty strong mix of deterrence as well as the possibility of diplomacy."
