Pro Macro: Ask Me Anything w/ Roger Hirst & Julian Brigden

TL;DR

Julian Brigdon discusses accurate predictions on inflation, bond market mispricing, and the performance of growth stocks and commodities.

Transcript

welcome everybody to a special edition of macro insiders where i'm going to be having a chat with julian brigdon who's the ceo and founder of mi2 partners and what i really wanted to get to today was um some great calls that julian's had um over the last uh number of months actually very consistent and i think there's four that i wanted to kick off... Read More

Key Insights

• 🌍 Policymakers, especially in Europe, need to address the mispricing in the bond market and the threat it poses to global bond markets.
• 🙊 The pressure from fiscal and monetary stimulus in the US will continue, causing inflation to persist beyond peak levels.
• ❓ The equity market, particularly growth stocks, could experience a significant correction due to tightening policies and market sentiment.
• 🧑‍🏭 The dollar's strength and its impact on asset prices and financial conditions are critical factors affecting global market trends.

Questions & Answers

Q: Are policymakers still being blindsided by inflation, and what are their concerns regarding future inflation levels?

Policymakers, especially at the Federal Reserve, are becoming increasingly concerned about high inflation levels and the impact on the economy. They are looking for clear evidence of inflation pressures abating before considering more aggressive measures.

Q: How long will the pressure from fiscal and monetary stimulus in the United States continue?

Julian Brigdon expects the pressure to continue until the end of Q3 or the beginning of Q4 in 2021. This is due to the large-scale stimulus package, which is five times larger than any previously seen in the post-war period.

Q: What could cause a pause in the current market trends and tightening policies by central banks?

A significant decline in asset prices, particularly a 30% drop in the S&P 500, could lead central banks like the Federal Reserve to reconsider their tightening policies.

Q: What needs to happen for the dollar to top out against the euro and pound?

The dollar's strength is closely tied to the equity market performance and financial conditions. A significant decline in asset prices and a weak equity market performance could lead to a reversal in the dollar's strength.

Summary & Key Takeaways

• Julian Brigdon accurately predicted that inflation would blindside policymakers and cause mispricing in the bond market.

• He also forecasted that growth stocks would come under pressure due to their connection to yield and inflation, while commodities would perform well.

• Policymakers are concerned about inflation, but the European Central Bank's lack of action poses a threat to global bond markets.

• The pressure from fiscal and monetary stimulus in the U.S. will continue, causing inflation to persist beyond peak levels.

• The apportionment of rising prices between businesses and end users will affect risk assets and bond market pricing.