The Julia La Roche Show
#104 Christopher Zook On Stagflation, Energy, And A 'Generational Opportunity' In Commercial Real Estate
Sep 21, 2023
Christopher Zook, Founder and Chief Investment Officer of CAZ Investments, discusses stagflation ahead and sees opportunities in dislocated assets, particularly in energy and real estate. He explores macroeconomic views, the impact of stagflation on stocks and bonds, and the dichotomy in the market. Zook also discusses the fiscal picture in the US, investment opportunities, and the potential in commercial real estate and energy.
42:57
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Quick takeaways
- Stagflation is predicted to impact various risk assets, leading to lower valuations and challenging traditional investment portfolios.
- The COVID-19 pandemic has accelerated distress in commercial real estate, presenting opportunities for investors in discounted assets and debt restructuring.
Deep dives
Headed towards a recession and stagflationary environment
Christopher Zook explains that the current economic trajectory is leading towards a recession and stagflation, where there is stagnant economic growth combined with high inflation. Despite initial optimism in the markets, the most likely outcome is a 'higher for longer' interest rates scenario, even if the Fed pauses its rate hikes momentarily. This is because the Federal Reserve is in a delicate position, where cutting rates too quickly could risk loss of credibility, and keeping rates too low could lead to a deep recession. The Fed's mandate of a 2% inflation target suggests that rates may need to stay higher than expected for a longer period of time.
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