Inflation, stagnation, stagflation? The ear-piecing cacophony of markets

Are we heading into a recession?” a friend asked me a couple of weeks ago and I was quick to give an opinion: “Starting with China, in an order of increasing likeliness, I’d say the US, non-commodity exporting developing countries, Europe and the UK. The UK is probably soonest to head into a painful depression,” I was quick to answer. As quick answers go, they are not based on known or knowable facts but a reflection of my own emotions.

Pundits, asset managers and the CEOs of big banks and investment vehicles are dispensing their wisdom in a similar fashion. They cannot know what will happen but shout at each other trying to drown out opposing views.  It is difficult to see the wood for the trees, for everyone. But as experts go, they cannot lean back and admit to knowing nothing.

What we all can see clearly is a bout of inflation not witnessed for two generations. The last time prices went bonkers in a similar fashion was in the 1970s and 80s. I have tried to explain the multiple reasons for this in my last piece: starting with an explosive demand push after mandated lockdowns, we see “Greenflation”, “Chinaflation” and “Putinflation” – the cost push of energy transition,...