YouSaid · the spoken record

Matt King

lines on the record: 35
first: 2021-11-04
most recent: 2021-11-04
sittings or episodes: 1
sources: podcast

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“paid and as you make more and more promises so at some point those get called into question and maybe on this what's further alarming is even though in general we don't seem particularly close to that point and even emerging markets that are stretching things in many cases today we've had currency weakness we haven't had runs on currencies today i also think unfortunately it's a bit like bank runs in the 1930s or in the 19th century the thing that causes a run on my bank or my government or my currency isn't necessarily anything i've done today it's the fact that there was a run on the currency down the road a run on the bank down the road and suddenly investors get nervous and so if we started to see this in emerging markets or in some of the smaller economies then actually it could quite rapidly spread through to the to the stronger economies and that as i look at the price action in some of the front end of rates markets today could be a very very early”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“To question. And while the limits around this for governments are greater than they are for private sector actors, when you do the long-term historical analysis Ray Dalio has done some wonderful work on this and you look back across centuries, unfortunately all the signs that the system could be close to a tipping point, maybe it's a bit better now because interest rates are lower. But basically we've passed them already in terms of aggregate debt levels across the public and private sector together in terms of political polarization, in terms of inequality. And frankly, all of that is extremely alarming. So to me, yes, it's all just an accounting construct, but actually it's such a powerful accounting construct that the governments and central banks are not actually as fundamentally different as we imagine. The clue is in the title, your debt or credit. It's about credibility. It's about whether those promises will get repaid.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“It is certainly true that governments are able to pull more levers and cope with debt in ways that corporates or households cannot. However, debt is this almost magical thing which on the one hand is just money that the system owes to itself and the process of adding more of these obligations to the system is almost always positive for growth or positive for asset prices provided that it remains credible, provided that people believe that they're going to get paid back. It's sort of like having a pension when you think that the government is going to pay you a pension in future. You go out and you spend more money today. The moment that you get to the point where you start to call into question whether or not the government is actually going to be able to afford the healthcare that it's promised you, then you're spending today gets called in.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“About inflating bubbles. And that for me is the sort of key judgment here. If there is another correction of markets, how do they respond? Is it providing much more temporary sort of support? Or conversely, do they say, no, we just need more stimulus still backed by even larger amounts of QE, even as we see this spilling over into things like inflation? And so that's been the trade-off for a long time. The unfortunately selling to the general public the idea of the long smooth deleveraging. It sort of like vote for me, I'll give you 10 years of stagnation, but it'll be better for your children. And that's a difficult sell. And yet the easier solutions are steadily increasing the likelihood of runaway inflation, increasing the likelihood of kind of monetary debasement. In a sense, we've had that debasement already, not with respect to goods prices up till now, but relative to asset prices and people's ability to afford a pension or afford a house. And the more debt you put in, the more polarized systems become, the more unequal everything.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“Can we achieve some form of long smooth deleveraging? And clearly the hope is, oh, now with fiscal stimulus productivity will go up and everything will be fine. Personally, I don't believe that at all. For me, actually, the right thing to do is to almost aim for some form of long, smooth deleveraging, some form of, I've said for years, the best I can imagine is a benign Japanification, but coupled with deleveraging. And Ironically, and people say, oh, that's just austerity. That never works. I think actually the Eurozone periphery has done way better than people give it credit for. They haven't needed more and more and more austerity. You just adopt a less credit-intensive growth model, which is very difficult at the beginning and gives you a negative impulse at the beginning. But then you can achieve a steady deleveraging. And I hope that we may yet get to this. For me, the policies that would create it are the ones where the central banks act as a backstop when things are going wrong, but then are much more circumspect than they have been.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“I certainly hope so, and in a sense we touched on it already, for for me what this boils down to is basically a series of cycles in which you buy the bubble and you sell the bath. So when the central banks come to the rescue and we pump the system full of debt, it may look terrible from a long-term sustainability perspective, but you close your eyes and buy it. And conversely, whenever they try and do the right thing, again, it's almost like dealing with climate change that would make things more stable in the long term, actually in the near term, you get nervous about a correction.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“Cash than you would do otherwise, and maybe you can combine it with put spreads or barbells with some commodities or some risk assets or even some of my strategists are saying things like Asian high yield, where at least you escape this systemic pressure where everything has become correlated with real yields, everything has become correlated with central bank policy. At least I get something idiosyncratic in my portfolio. Again, that's the ideal. But basically where we've created this environment where everything depends on monetary policy more than it depends on fundamentals, those periods where monetary policy at least temporarily is withdrawn, they get really, really difficult.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“Government ones and investment grade credit because inflation is under control and the UK flattening is carrying on. Or conversely if when the central banks are going back to easing then you can pile into risk assets all over again. And at a client event recently we did an interesting survey where we asked if there is a correction in markets, will you be buying the whole way through because you've been preparing for this? Will you be buying only when we get back towards fair value, call it five or ten percent, maybe 10 or more percent down in the equity market? Or will you only go back to buying once the central banks are back to easing again? And the rather dismaying response from a majority was a little bit like 2018-2019. We're going to wait until the central bank's go back to easing. And if that's the case, the trouble is, again, with the inflation pressures in the system, we're miles away from that point where the Fed put kicks back in again. And so just temporarily, basically, I end up holding much more.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's the framework that I've tended to use. I like to talk in terms of the real yield cycle, where when central banks come to the rescue and real yields go down, you're supposed to pile in, even though the fundamentals look bad. And then there's a second phase where growth begins to return and investors and inflation break evens move up. And the market rally shifts away from investment grade to high yield and away from growth equities and towards more cyclical equities. But if we're now getting back to this point where fundamentals are supposed to be taking over, but real yields start moving up, multiple times we've seen in that environment, maybe temporarily bank equities do a bit better, but basically it's really difficult. And even things like gold might ultimately be a defense, but they tend to do poorly if real yields are going up in the near term. And almost what you end up doing is going back into cash in a great many cases and awaiting a re-entry point either to”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“So if you really think that Goldilocks is over, that the inflation is permanent, and that the central banks will allow it to run, then obviously you start digging out your very long-term historical returns and you look back to the 1970s and so on, and you look at what would be an inflation hedge. And people sometimes say equities on the numbers I look at, that's not very persuasive. You really come back to commodities especially, obviously, and to some extent real estate as being your inflation hedges. If, though, you think that you're in this almost temporary environment where the inflation pressures are there, but actually markets everywhere have been made fundamentally expensive by all of the stimulus in a way that means that you could be close to some form of tipping point, especially if real yields start going up, then in a sense it's more complicated, maybe it's more temporary, but it's more complicated.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“Historically over the last decade or so, been terribly important, not only in the immediate commodity markets and some real estate markets where you might have imagined, but even”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“Not a big deal for the US with its more insular economy. And maybe we can have the same conversation around rate hikes and tightening of policy, a conventional approach would be to say, but, oh, normally markets do well during the first few rate hikes in the cycle. Surely there's nothing to worry about. And for me instead, there's a whole broader story which has become ever more intense over the last decade almost, where all my favorite fundamental relationships are broken down as companies have levered up and spreads of tightened in and there's been lots of uncertainty, but there's been no volatility. And where the underlying drivers of everything, as far as I can see in market terms, have revolved around the wall of money, the reach for yield, the global liquidity patterns. There are a number of terms for it, but it really boils down to, for me, this quite literal process of money creation, and it's in this context where China has”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“The funny thing is that the China slowdown, while I think it's hugely significant, and EM investors seem to think it's hugely significant, again, DM investors have mostly shrugged it off. And even the numbers over the weekend are a perfect illustration of this, the market just hasn't seemed to care today. And so either the slowdown needs to become much more entrenched. And yes, when I speak to investors, a number of them do seem to think that there's going to be a more aggressive easing earlier than we do. And we look instead at China's willingness to tolerate slowdown and draw bearish conclusions. But again, it's puzzling how the market hasn't responded. And maybe this comes into a whole sort of broader set of questions around how markets have really been behaving and what the underlying drivers have been. So a conventional analysis would be, oh, the China slowdown might be significant for some commodities or might be significant for Germany exporting and Switzerland to China.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, and either that happens by itself because the market valuations are overly elevated or it happens earlier than you would have thought, or if it's not happening and the equity market is making new highs and the housing market is becoming even more ridiculously expensive than it is at the moment, again, I suspect you may need to move in that direction.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“Became much more entrenched than you would have thought, and almost the only way ultimately to bring the system back into line was through the aggressive rate rises to make everything settle down. And so I think that, for me, again, is the paradox, even if the problem is the supply side, it may be that you need to tighten policy and reduce demand in order to get the good behavior to just-in-time behavior, the smooth behavior that we got used to to revert to it. And that's the puzzle. Everyone is busy scratching their head, looking at these micro supply chain shocks, saying, I don't understand. Why can't it just go back to how it was previously? And I think the system is a bit more complex than that.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“That may be true for the US in particular. The US is the only place where people's incomes really went up massively. And yet, of course, we have the inflation pressures showing up elsewhere as well. And so I think in the immediate analysis, you have to say, well, it's about supply shortages, it's about bottlenecks, it's about the lack of wind in Europe and gas price prices. And yet, the conclusion that people therefore draw is it would make no sense to tighten policy in order to deal with it. And again, it's sort of this presumption it will settle down by itself. And I'm no expert on the 1970s, but again, it seems to me ironic that there too you start from what was largely about supply constraint, supply shortages in segments like oil. But again, you saw that actually that became much more entrenched, the inflation that resulted.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“Looked back and said, but we fell short on the CPI target, we should have had easier monetary policy, and now they're trying the easier monetary policy. I and many people in the markets look back at the boom bust cycles at the asset price bubbles at more and more debt in the system and say, with hindsight, you should have had tighter policy at a minimum when the bubbles were forming. And I think the trick, and likewise you were right to Reason 2020, but you should have tapered way earlier. And the trick to doing it is to make it conditional, to take the holistic view that includes asset prices a little bit more or looks at broader credit dynamics and says, yeah, I will tighten rates today, but if it starts going horribly wrong because there's a big bust in the housing market or in equity markets, then I will be easier in future. And on the one hand, a number of central banks are moving in that direction, the ECB, with its we're going to maintain favorable financing conditions, or the BOJ with yield curve control, or the RBNZ.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“Into line with one another, but equally Mervyn King put it nicely on another city call he said the role of a central bank is to keep supply and demand in line with one another when the virus first hit it became clear we were going to have a massive shock to demand and say you needed all the support in 2020 but then equally it became rapidly clear that there's also been a shock to supply now if anything you just don't have that need for super easy monetary policy and if you carry on with it it's quite likely that you do get overheating and the erratic behavior continues And so for me, I mean at a minimum, even if they were right in some of the immediate inflationary pressures have slowed down. For me, there's a funny parallel with almost with climate change here. What's the paradigm we've been in for an extended period? It's one where even if there hasn't been CPI inflation, there's been asset price inflation and there's been these boom bust cycles in asset prices. And central banks have”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“I think, and I think that for me, the paradox is it is a bit like bringing up children or something. You almost need to be stricter today in order to create longer-term stability. And conversely, if you are lax today, then the bad behavior will carry on. And maybe that was, I used in my presentation this example of the double pendulum, where once it starts going a bit bananas, it doesn't settle down by itself as the oscillations get smaller. It remains very erratic until you really crimp down demand, until you really almost stop the system through a recession or through rate rises, and only then can you does the thing start behaving. So on the one hand, yes, there is exactly a perfectly valid criticism that look, if I raise interest rates, it's not going to improve the availability of truck drivers necessarily. And so it seems a terrible shame to crimp down demand as a means of bringing the two back into.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“Says, look, either you do the tightening and you have the abrupt turnaround as the Bank of England is doing, or else I'm almost going to force you into it, maybe not over the next two years, but definitely over the next five years.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“Porsche and the longer end may yet flatten more still. And I think that's just tough for the central banks to escape from, frankly. Now, maybe I'm wrong on that point is further away, but it's almost as though they back themselves into a corner, because to begin with, they said, well, we don't need to worry about inflation unless it turns into rises in inflation break-evens. And inflation expectations, and lo and behold, you've got longer dated inflation expectations in the US north of 4% on the New York Fed survey. And likewise, they said, well, we won't need to worry about it unless it turns into unless it moves away from just a few commodity prices and it turns into rises in wages. And lo and behold, you've got average hourly earnings north of 5%. And so again, they've almost backed themselves into a corner. I'm not actually convinced that inflation expectations are quite as pivotal as the central banks think they are, but the markets are now liable to respond to that. And I think that's what's creating this environment that we're just starting to see whether”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“I like to think in terms of what I call a credibility gap between inflation expectations on the one hand and real yields on the other. And when I look at that, basically we've already got the biggest gap between real yields and inflation that you've had since the 1970s. And while I don't fully know, as I look at some of this aggressive behavior in bond markets in Australia and Canada and places that would almost seem dormant previously, and as I look at the still terribly low levels of term premium which exist across the board, I think you're quite close to the point where the central banks are damned if they do and damned if they don't. If they don't respond at all, then I think quite rapidly you could see the bond market being destabilized at a minimum, let's say in the five-year...”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's not very likely but I think it's not very likely because I see risk assets crumbling first and hence we come back to this paradox that if they haven't crumbled then you may go down that route. So again Larry Summer has made an interesting comment at our city's Australian conference recently that he thinks the US economy could withstand policy rates going to five sorry to three and a half percent”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“Because the analyst told the portfolio manager it was cheap. It's always the PM telling the analyst, well, we've just had another inflow and we've got to put the money somewhere. And the latest example here for me is 2018, which is still my favorite comparison with where we are now, where, again, growth had been strong and there was fiscal stimulus in the system, the equity market was making new highs. The Fed thought it had an appropriate level of bank reserves, an appropriate level of monetary policy, an appropriate level of real yields, and then all of a sudden you got this correction in markets out of the blue and that threatened to seep into the economy and persisted until the Fed basically turned around 180 degrees. And on the one hand, that level of real yields was 200 basis points above where we are today. And it seems odd to think that we could again have outflows when real yields are so negative. And yet for me, the long-term pattern suggests that actually, and the wobbliness that was starting to get in some market behavior and to some extent in fund flows at the moment suggests we could be much closer to that point than people imagine.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“For me there is a long term story here and where we're going to probably get to is what level of real yields really counts for investors, but the long term story, the slightly scary story is the last few cycles have not really gone according to plan. At no point, at least until now, have the central banks had to raise rates to choke off an inflation and overheating an economy. And what's triggered recessions has instead been accidental bursting of asset price bubbles. And the scary bit is that each time it's been a lower level of real yields, which has triggered that bursting of an asset price bubble, and it's almost as though it's taking a lower and lower level of real yields or a larger and larger degree of stimulus to keep investors holding on to fundamentally expensive assets. And my usual bad joke is that it's been years since I visited any investor in any asset class who was buying things.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“And they're seeing real yields back at the lows, and they're saying, well, therefore, there's nothing to worry about. And even as you get this aggressive yield curve flattening in particular, again, it really feels to me as though there's just a mismatch between yield curves increasingly saying, hang on a minute, we've got a policy error here. And then, as you say, the equity market saying, no, don't care. The long dated real yield has just gone down. Let me increase my estimate of the fair value of everything because I'm discounting my dividends at a lower rate. It is remarkable and I think is increasingly a source of vulnerability. And yet, as of today, it's mostly carrying on.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“People start saying, oh, we've priced in too many rate hikes. When you break down the rates market move into inflation expectations on the one hand and then real rates on the other, you come to this rather remarkable conclusion that actually all or even more than all in some cases of the move up in nominal rates of the pricing in rate hikes has been inflation expectations, and what that means is that real yields are basically still at the lows. They've just begun moving up a little bit in Germany and the UK just the last day or two. But again, as one client put it to me, that means that we're not actually pricing any tightening at all. It's almost as though we priced a stealthy easing. And I think that goes a long way towards explaining why it is, especially in recent years where investors have sort of been trained almost, oh, don't look at the underlying fundamentals. They haven't got anything to do with the market price. It's only about the stimulus. It's only about the...”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“The basic questions are always the best and the hardest. So we have likewise been scratching our heads around this. And the obvious thing you can point to is the strength of earnings. But even and earnings have indeed been completely phenomenal. Even then, though, it's sort of interesting that you look at, say, changes in earnings expectations, and they're still going up but barely, and the rate at which they're going up has frankly been plummeting. And so while the guidance has not been quite as negative as it might have been if all of these problems were filtering through with one or two single name exceptions, this still looks like there's a big mismatch between, again, those underlying fundamentals and these potential problems. And as you say, the price action, and to some extent likewise, you can point to a narrowing of the stock market performance. But I think the big picture explanation, which increasingly I'm minded towards is even as a number of”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I guess the example that I was really thinking of is simply Japan, where inflation expectations have moved up much less than in other markets. Europe versus the US. I'd say this thing with running just-in-time economies or running everything lean, maybe that increases the vulnerabilities to suddenly supply chains failing. I don't know that that necessarily increases the price pressures or at a minimum. That feels indirect to me. The obvious explanation there, I have to say, is simply that the Larry Summers.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“As we see these potential shifts, again, I think that the possibility that they end up rippling or cascading through the economy and are more lasting, even though the existing, the original problems get fixed, that potential, again, I think is underappreciated in the nice linear models that everyone has got used to.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“And if I had to guess I would say my suspicion or fear, but maybe I'm just being overly negative, is that the price increases are a bit stickier and more lasting than we would have liked and then the central banks would like. And conversely, maybe the growth is a bit less robust than everyone likes to think at the moment. And as you say, it's this capacity to suddenly go back to destocking restocking cycles that we'd forgotten about. I almost see it in my own behavior when I go to the supermarket. When everything is fully available, you buy only what you need. But the moment it starts getting a little bit low, you think, oh, maybe I better buy an extra one. And it's that potential to suddenly change the system's behavior, this inelastic linkage of supply and demand, or this shift back to what our German economists are calling a stop-start manufacturing cycle. Again, it's interesting as you start having these conversations around stagflation and everyone protests, well, that's absolute rubbish. We can see the inflation side of it, but demand is really robust.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it makes me mistrust the models that we built up over the last few years even more than I mistrusted them anyway I think it makes me worry about the return at least temporarily to some form of boom bust cycle”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think one of the things that's interesting about that is you might almost speculate some of it, yes, is smaller, more open economies like the UK that have cut themselves off from Europe being vulnerable. But some of it, is it a coincidence that actually some of these supply shortages are almost most intense in the most highly capitalist economies like the US, where actually you've had an incentive over decades to make everything efficient, to whittle down your inventories, to make a nice, lean product, which again, when it works gives you the super high profit margins. But the sorts of redundancy or overcapacity which you might have built in as a cushion, that's exactly what we've taken out, whether it's from supply chains or even whether it's from health services and things. And suddenly you're seeing the potential vulnerabilities that result.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“Didn't blow enough and what have you. And for me, the striking thing is just the sort of systemic features that nobody's talking about, the way that economies have become steadily more specialized in ways that are highly efficient to make firms profitable when everything works, but are also vulnerable to exactly these sorts of breakages. And again, in this assumption that everything is transitory or sorts itself out and everything goes back to normal, I'm just terribly conscious again you were sort of hinting at it in this.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source
“So, there's any number of things which are completely different. Likewise, we hadn't really had to worry about inflation except in a negative sense until now. And I've been deep in the disinflation recamp. And then suddenly you're recognizing this potential for a paradigm shift. So yes, absolutely, I had never had to plot inventory curves for European gas storage, for example, never mind worry about effects cascading across from one segment to another. But what strikes me in all of this, you're too complementary about the bottom-up work I'm doing in a sense, in that I'm terribly interested in that. And yes, I'm having conversations with my shipping analysts and they're saying, oh, even as you strike deals now beneath the current spot price, it's nevertheless double or triple the rate that people have been paying over the last few years. But what strikes me generally is everyone has all these micro explanations for the distortions that we're seeing, the blockages in Long Beach and the gas prices in Europe and the wind.”
2021-11-04 · Odd Lots · Citi’s Matt King on Why Inflation Isn’t Transitory and the Fed May Induce a Recession · IDENTIFIED FROM THE TRANSCRIPT · source