Odd Lots

Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession

Nov 4, 2021

Matt King, Global Markets Strategist at Citigroup, shares his insights on the current inflation landscape, arguing it’s a result of a significant economic shock. He believes the Fed may need to implement aggressive rate hikes to curb inflation, potentially leading to a recession. The conversation delves into supply chain challenges, the dichotomy between a strong job market and weak consumer sentiment, and the complex dynamics central banks face amid rising debts. King also addresses the economic implications of China’s slowdown on global markets.

55:10

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Episode guests

Matt King

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Episode notes

Intro

2min

Supply Chain Disruptions and Economic Paradoxes

10min

Exploring Supply Chain Challenges and Economic Dynamics

6min

Earnings, Yields, and Central Bank Dilemmas

14min

Navigating Monetary Policy Dynamics

6min

China's Economic Slowdown and Global Implications

20min

Echoes of Economic Cycles and the Value of Therapy

4min

Inflation is elevated these days, and markets around the world are pricing in rate hikes. However, risk assets like stocks are doing just fine. There seems to be some presumption that any Fed rate-hiking cycle will be mild and that ultimately inflation will settle down without too much further pain. Matt King, the Global Markets Strategist at Citigroup, isn't convinced. On this episode, he explains why what we're seeing now is the impact of a big "whack" to the global economy, one which has no natural mechanism to rediscover equilibrium or balance. He believes that, for the Fed to actually tame this inflation, it may need to go further than just modest hikes, and move aggressively to tamp down demand, possibly creating a recession.

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