Alternative Path

[gdl]

Why economists who originally expected multiple deep rate cuts in 2024 now say a hike is possible - MARKET INSIDER article

Seems my very long-standing assumption on Inflation is finally getting thru. Not yet the mainstream but coming. The market baked in 3 or at a minimum 2 rate cuts this year and with it the high multiples on the P/E ratio. What happens if stagflation occurs? Think the 70's. the market went down and stayed there for a very long period. the lost decade. This time around we start at even higher multiples and accelerated profit expectations. This will devastate the market and when inflation continues higher it will cause massive defaults in many sectors of the economy. The recent run-on banks will be a small example and magnified 10-fold.

But this takes time and a slow realization from multiple months of higher inflation to finally set in.