This week I am going to try and explain why we should take seriously those bulls who argue inflation might reappear shortly, helped along by excessively optimistic markets.
Maybe we might even see the return of wage push inflation as workers try desperately to rebuild savaged real incomes. Let us start at the beginning of this more bullish narrative with what I think we can reasonably surmise as the ‘market consensus’. The best summary I have seen so far is by an excellent UK macro investor and blogger called Macro Man who identifies seven key trades for 2014, including the likelihood that “emerging markets are going further down, developed world equities are going further up, but they are going to correct first, inflation is dead and commodities will flatl...
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