When it moves, everything moves. If the dollar rises sharply back to the middle of the range, it kills the inflation narrative for now.
The real guts of the inflation debate is more likely next year's story.
It is normal to see inflation fears immediately after recessions but they tend to ease sharply (or entirely reverse, as do bond yields).
And The Fed always cuts again (for 2 years) after the recession as stimulus and re-bound effects wear off...
Same happened with QE after last recession
The government tends to push through one or two more stimulus (in this case I think they will be massive) and the Fed balance sheet will continue to expand, and bond yields should drop once more...
My view remains that H2 is weaker than expected and inflation fears subside for now, and growth looks patchy. That results in more stimulus (not tightening) in Q4.
What does it mean for markets? Well, the dollar keeps rising for a bit. Commodities correct. Tech and Exponential Age stocks rip higher.
Weaker data will eventually lead to Gold and Crypto moving sharply higher, especially once the dollar stabilises a bit.
We need to see the dollar break this inverse head and shoulders first...
But I think the dollar is range bound and heads to the 96 to 98 level before settling...
Let's see how it plays out... but keep your eye on the dollar. It is still the king, and remember 100% of all forecasters on Bloomberg at the beginning of the year suggested it was going to weaken a lot. They are usually wrong when consensus is so high.
But massive infrastructure stimulus that will keep coming will drive up commodities over time as long as the dollar is not ripping. But I think the first wave is possibly done and will correct for a while now.
A bit of shade being thrown about the Banana Zone. Let me clarify...
Macro Summer and Fall are driven by the global liquidity cycle that exhibits clear cyclicality since 2008.
Why since 2008? Well, back then the worlds all reset their interest payments to zero and they debt maturity to 3 to 4 years, creating a perfect macro cycle.
You can see the perfect cyclicality in ISM (the best guide to the business cycle)
Well, the genesis of ALL my thinking comes from Global Macro Investor, where @BittelJulien and I do our deep thinking each month (120 pages+).
I'm immensely proud of GMI and Ive been writing it for 20 years.... 1/
It is an expensive research service and is subscribed to by many of the world's largest hedge funds (usually the principals), SWF's, Asset managers, RIA's, Family Offices and HNW investors.
It also has the best proven and recorded track record of any research service...ever.
A 20-year track record of performance is not something that any other service provides.
My track record has many 100% plus years (thank you crypto!), many decent years, some so so and some bad ones. But it is all timestamped and transparent.
What is Macro/Crypto Summer and why does it matter?
Well, macro summer has started, its the part of The Everything Code cycle where the ISM picks up (GDP growth).... 1/
And that is driven by liquidity, which bottomed at the end of 2022... macro summer and fall are all about liquidity rising and is a core part of The Everything Code thesis...
And that, in turn, lifts tech stocks... they LOVE macro summer and fall...