Barry Knapp of Ironsides Macroeconomics rejoins the podcast to discuss his 2022 outlook for the economy and markets. He is broadly optimistic on the former, but less enthusiastic about the latter — at least in the first half of the year — with strong possibility of ‘uncertainty shocks,’ especially around Fed events (sound familiar?) There is also some interesting discussion around interest rates, inflation, and China, among others.
(Spotify users can link to the start of the section by clicking on the timestamp)
- A lot has changed in a year, though probably nothing quite as much as the inflation outlook (3:04);
- Markets and economics should diverge significantly in the first half of the year (4:51);
- The Federal Reserve is due to embark on a rate-tightening cycle, which should be negative for markets but will be net-neutral, or perhaps even positive for the economy (8:00);
- Inflation is running hot, but the guest has done some deep research on similar historical epochs and finds the concern less pressing than most (17:20);
- The key level for inflation is 4% — if the CPI exceeds it consistently there could be trouble. Link to the Fed paper referenced here (21:33);
- Still, there is a strong possibility for ‘uncertainty shocks’ in the first half of the year (29:52);
- Finally, China: Reasons to be bearish. Very bearish (34:58).