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Felix argues the Fed’s inflation target has been breached for over 60 months, yet stimulative measures like suppressing oil prices, yields, and currency manipulation have offset the need for rate hikes.
He projects oil prices will rise until triggering a major global recession or stagflation, with demand destruction becoming permanent above $160 per barrel.
Simon Dixon says the market does not believe another escalation is imminent, citing gold at $4500, VIX at 17, and S&P highs, but notes bond yields above 5.1% on the 30-year and 4.6% on the 10-year are stressing the real estate market.
Consorti states wages have been outpaced by price inflation for the entire last 18 months, a situation he calls terrible for the asset-poor.
He claims the equity risk premium is the most negative it has been relative to the 10-year Treasury yield in over a decade, creating a rich incentive to bid for U.S. Treasuries over equities.
Collum cites a 1977 article by Warren Buffett detailing how inflation destroys equity returns, contrasting it with modern market analysis focused solely on liquidity flows.
Krystal noted China is currently importing less oil than usual as a strategic favor to the global economy, preventing prices from spiking to $150 a barrel and gasoline from reaching $6 a gallon in the US.
They agree the core political choice is between higher taxes, spending, and inflation versus a focus on wealth creation, sensible education, and getting government out of the way of business.