저자: Stockology Insider · 외국인
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The global economy isn't normalizing. It's getting wired for whiplash. And Muhammad Elaran is basically warning that Wall Street is pricing an 80% soft landing fairy tale that might only have a 50% chance of not blowing up in our faces. So start with what the what the market thinks. The market thinks that this will be a temporary and reversible shock because after all we threw everything at the US economy last year and the economy proved incredibly resilient.
So this will be the play once again. Okay. However, this time around we are this is coming on top of a few things that are adding up. An uncertain labor market, affordability concerns, you have three distinct sources of financial fragility and you have inflation that was already heading up which limits policy flexibility.
So I see the sort of central scenario that's an 80% probability in markets about 50%. the bigger. So again, you see an 80% scenario in markets at 50%. That's that's the b the baseline right now in markets of a temporary and revers. Is it 80%? But you're saying you think it's actually at 50%. Correct.
And there's a bigger question that we see which is we got to understand that this global economy is subject to more violent and more frequent shocks. And there's a really good reason for that. We've lost the unifying themes. So, we just have to be ready for a lot of volatility this year. And so, when you think about this 80%, you think the market's at 80% in terms of this being resolved in two or three weeks from now in a in a good place.
Correct. And your 50% basis is based upon what? It's based simply that while the market nets things out, the economy compounds them. Mhm. So if you put one shock after another after another, you lose financial resilience, you lose human resilience and your ability to bounce back is less. And we have thrown a lot at this economy in the last 12 months.
And right now between the labor market, between the inflation dynamics, and between what's happening in the financial markets, there's reasons to be less. Do you think there's any chance that things get worse, meaningfully worse in the Middle East? meaning uh China looks at this and says, "Oh my goodness, we we can't have this anymore." And and somehow they tried to intervene or get involved in some way that we haven't even thought about yet.
So you had Jared on earlier today and I was listening carefully to him because I have a lot of respect for how he thinks about these issues. I think the point he made made about un asymmetrical wars have an unpredictable element to them that you have to take seriously and that is what why the tail the left tail is so big here because there is this element of unpredictability.
Okay. But let me throw in a different political a domestic political issue which is this president has been very cognizant to his credit of what's going on in our economy here. And so there's part of me that wonders whether he could look at what's happening and say, "You know what? I I wanted to do this for two or three weeks or four weeks.
I still there's still stuff I want to do on the ground, but you know what? I I I can't have it this way. And politically, it's going to be bad for me. It's going to be bad for Republicans. We're going into the midterms. I can't have oil prices at these numbers." And then he steps away. What do you think the chances are that that happens?
That's certainly possible, but he also needs to convince two other parties to step away, Israel and Iran, and they have different agendas at this point. So that's that's point number one. Second, he's already aware of this because he said over the over the weekend, the higher oil price is a price that's worth paying.
However, it compounds the affordability issues. So, he's going to keep an eye on that. The one thing I would stress is we've got to stop thinking that oil supplies and and and supply chains are like an onoff switch. You can't turn it back on. If the UAE, Kuwait, and Qatar stop production, it would take weeks to resume production.
Part of the reason they're stopping production is they are so they're filled to the brim. They have nowhere else to store this. They've reduced production. They haven't stopped it yet. Right. It would be, look, if if you can get the ships moving again, you can start kind of quickly unloading some of that stuff that's been building up in the meantime.
If you can get the ships moving again, if you can get new ships coming in, that point is what what's the time frame for when this is like oh boy, this is it is weeks and months. It's not days. I mean, there's this assumption in the market. It is days. And we seem to have forgotten the lesson of co is when you impose a sudden stop
on supply chains. Things are in the wrong place when you want to start them again. The the end for co when we had these problems was that um economies cratered. Do you expect that to be the case this time around? If are you expecting an economic downturn to the point of recession based on what we've seen happen?
No, I'm expecting that GDP growth will be about half a percent lower than would have been otherwise. Okay. I'm expecting inflation will be a percent higher and I'm expecting those central banks in Europe that have a single mandate are going to be hiking rates and that's what the market also expects right now.
What do you think the US Federal Reserve is going to do as a result? I think they will just stay unchanged and wait and see. No one wants to repeat the mistake of the 2021 transitory inflation call. No one wants to repeat that mistake. A percentage point higher in inflation than it would have been otherwise.
Yes. That's over three. That's like Yeah. Three to three and a half%. Three and a half%. For how long? Transitor. Um I don't like that word because that word encourages all sorts of of bad behaviors. Um I think that if you look at the average for the year, we will be about 3% for the
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