Surprised no one asked the most obvious question: how did the #bigflip epiphany come to be? I mean before the data started to make it pretty obvious to me. Well, here’s how. I started to be puzzled by how naive the assumptions that market expectations were feeding on in Q4 23
1/4
1/4
Clearly this naivety was fed by narratives peddled by unsophisticated economists, journalists and investors. First level of naivety was to over-estimate the effects of the hiking cycle when private savings were so high. This was bluntly wrong to the naked eye.
2/4
2/4
Second level of naivety was the prevailing expectation that somehow inflation will be brought under control so quickly and with so little real economy pain. You clearly have to be totally oblivious to how the economy works to believe this. I mean the Fed stood a chance.
3/4
3/4
But they blew it in Q4 when they let hawkish expectations peak. Now this incompetence is not unexpected from usual low calibre players, what was shocking is that it seeped into market pricing across many markets, rates, FX, equities…that was the inception of #bigflip
4/4
4/4
• • •
Missing some Tweet in this thread? You can try to
force a refresh
