Harry Melandri, advisor at MI2 Partners, and Vincent Deluard, Director of Global Macro at StoneX, discuss risk assets and the global economy. They also delve into Vincent's Macro Roadmap and potential QE by 2026.
Inflation is expected to reset to a higher level driven by wage growth.
There may be a potential financial crisis in 2025 due to factors such as corporate debt maturity and liquidity issues.
Deep dives
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The Inflation Reset and Wage Growth
According to Valson Deluard, the director of Global Macro Strategy at Stonix, inflation is resetting to a higher level. Nominal growth and inflation rates have been subdued in recent years, but they are expected to reach their more normal levels of around 3-4%. This shift is primarily driven by wage growth, which is projected to be in the 4-5% range. As wage inflation increases, it is likely that inflation itself will rise as well.
Potential Economic Headwinds in 2024-2025
Looking ahead, there are potential headwinds on the horizon for the economy. In 2024, there may be a modest fiscal retrenchment with a shift from positive to negative fiscal impulses. This could lead to a slight slowdown in the economy, but it is unlikely to result in a recession due to the substantial deficit spending. In 2025, factors such as corporate debt maturity, construction market slowdown, and liquidity issues may cause a more significant impact on the economy. These combined factors could result in a financial crisis and potential rate cuts by the Federal Reserve.
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Harry Melandri, advisor at MI2 Partners, is joined by Vincent Deluard, Director of Global Macro at StoneX, is here to break down the latest developments in risk assets and the global economy. We'll also take a look at Vincent's Macro Roadmap from the Taylor Swift Hangover to the potential QE he sees by 2026.
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