Recession + Stagflation

Macro D Thought Piece

RECESTAGFLA [1]

"Human life is like a pendulum that swings incessantly between pain and boredom, passing through the fleeting, illusory interval of pleasure and joy."

Arthur Schopenhauer believes that it is a pendulum that swings our life, and the expectation of the swing that marks its time is what we are granted to hope. We human beings are indisputably projected towards the future; we are perpetually waiting for something positive to happen to our lives to allow us to move forward without suffering the pains of hell. Well, if the pendulum is the market that today swings insistently between two possible directions, pain (recession) and boredom (stagflation), how, as macro traders, can we orient ourselves to understand whether this pendulum prefers pain (recession) or boredom (stagflation)?. For now, like Schopenhauer, let's recognize where we are: we are in the midst of a fleeting and, what's more, illusory interval.

While we wait with bated breath to see when the Federal Reserve will start cutting rates (or even raising them), what, more than anything else, has turned the mental attic where I keep the teachings of the greats of the past upside down?

There's no point in beating around the bush; the great saga revolves around the leading actor who has not signed an exclusive contract with Hollywood Studios but with the most important central bank in the world: the Fed.

Let’s dig in.