IRF Lunch with Julian Brigden - Goldilocks Isn't Easy
Macro Intelligence 2 Partners
The Lansdowne Club, London W1J 5JD
Thu 21 Mar 2024 - 12:30 GMT
Summary
Julian Brigden discussed the Fed's pursuit of a "Goldilocks" soft landing, noting a historical success rate of only 33%. He highlighted the Fed's focus on labor market metrics beyond inflation, warning of potential wage-price spirals. Julian expressed concern about rising unemployment potentially triggering a recession but noted current models don't foresee significant acceleration, attributing recent upticks to seasonal factors. He cautioned about persistent inflation and wage concerns in Europe's manufacturing-based economies. In the bond market, he anticipates yield increases despite short-term adjustments and advised against expecting a steepening yield curve. Regarding stocks, Julian suggested short-term momentum could continue but warned against potential bubbles. He recommends Japanese markets for best opportunities. He concluded by discussing the benefits of a weak dollar for sectors like energy and mining.
Topics
The market is too focused on inflation as the single metric driving cuts and fundamentally misunderstand the Fed’s current policy framework
Driven by hyper-financialisation, US economic porridge isn’t Goldilocks “just right” but for now remains “too hot”. Cuts are hard to justify
In Europe, cycle manufacturing and domestic growth is rebounding. Inflationary pressures have peaked but aren’t vanquished
Bond are expensive and remain locked in a tug-of-war with stocks. If we get a soft-landing it could frustrate everyone’s favourite trade
Certain US stocks are clear bubbles in a broad market that is extraordinarily expensive. There are better opportunities elsewhere
