Odd Lots Jon Turek on the Macro Outlook for 2022
Dec 23, 2021
Jon Turek, author of the Cheap Convexity blog and founder of JST Advisors, shares his insights on the macroeconomic landscape. He delves into the implications of rising inflation and its effects on risk assets and bonds. Turek discusses challenges in navigating the post-pandemic economy, including wage growth and changing consumer behaviors. He also uncovers the Federal Reserve's strategies regarding interest rates, examining their impact on market dynamics and the bond market, all delivered with a touch of humor.
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Inflation Surprise
- Inflation stickiness and its breadth surprised in 2021, impacting various sectors.
- This challenges the Fed's initial approach of flexible average inflation targeting.
Demand's Role in Inflation
- Demand significantly contributed to price pressures, amplified by supply fragility.
- Strong wage growth, especially at lower income levels, adds to demand pressure.
Goods vs. Services Inflation
- Goods inflation will likely decrease as the economy shifts back towards services.
- However, durable goods prices might not deflate as they did in the 2010s due to persistent demand.