• Clifford Bennett, Chief Economist at ACY


• 15.11.2021 11:30 am
#stocks

Today, you need to know it will continue.

Inflation will destroy consumer behaviour.

Elon Musk has cleverly used the cloak of 'social media caring', to begin to cash in on his own over-valued company.

Listening to Janet Yellen speak over the weekend, it was clear she had no idea as to what the real reason for inflation is. With the greatest of respect, but on this one the Treasury Secretary is wrong. How can I say that? Having mixed at this level, I really can.

Still firm on 'transitory' inflation?

We have had it right all along. The cause of current inflation is BOTH supply chain disruption and FREEDOM OF PRICING!

We figured this out long before anyone else in the world and we had the courage to say so loudly. When others discounted both inflation and Delta several months ago, we said they were a Twin Tsunami that would wreak havoc around the world, as such they have.

Anyone who thinks the US economy is strong... has rocks in their head and is stupid.

Otherwise, they may be very fine people.

US Consumer Confidence fresh decade low, headed toward GFC levels.

Far worse than the peak of the shutdowns and health crisis.

Will oversee skyrocketing inflation and US dollar strength at the same time. Both will further deteriorate a US economy from its already teetering position.

The Federal Reserve will be hiking rates in a sub-trend economy. Not an enviable position, but the clear result of their being so far behind the curve.

There are no excuses. If we could see it all year, why couldn't the Fed and the RBA?

I even said back then that two things would happen. They would be raising rates much sooner than they themselves were aware, and have to embark on a more aggressive rate hike cycle than would otherwise have needed to be the case.

This is the crucial point for our long term economic outlook. For it sets up a roller-coaster of events of trying to head off inflation and managing occasional sharp dips in growth.

The economic smooth sailing, and then boisterous partying of recent years is well and truly behind us.

Which brings us to a more broad risk of a US stock, and perhaps simultaneous property market decline. Both brought about by over-stimulus during the pandemic on top of already very easy policy settings.

Everyone always gets rich, just before the bubble bursts.