{"id":64161,"date":"2022-11-17T13:51:15","date_gmt":"2022-11-17T18:51:15","guid":{"rendered":"https:\/\/olduvai.ca\/?p=64161"},"modified":"2022-11-17T13:51:15","modified_gmt":"2022-11-17T18:51:15","slug":"the-regime-is-shifting-and-heres-what-that-means","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=64161","title":{"rendered":"The Regime Is Shifting, And Here&#8217;s What That Means"},"content":{"rendered":"<header class=\"ArticleFull_header__Eyn7V\">\n<h3 class=\"ArticleFull_title__MEgbb\"><a href=\"https:\/\/www.zerohedge.com\/markets\/regime-shifting-and-heres-what-means\">The Regime Is Shifting, And Here&#8217;s What That Means<\/a><\/h3>\n<\/header>\n<div class=\"NodeContent_mainContent__t4rGu\">\n<div class=\"NodeContent_body__6iJOI NodeBody_container__hI8PI\">\n<p><em>Authored by Simon White, Bloomberg macro-strategist,<\/em><\/p>\n<p><strong>The macro landscape is changing.<\/strong>\u00a0Inflation will remain in an elevated and unstable regime, but the first stage of the crisis is drawing to a close. That means the dollar in a downward trend, bonds in an upward trend, stocks underperforming bonds, and growth outperforming value.<\/p>\n<p>Regime shifts can be almost imperceptible in real time, but<strong>\u00a0in retrospect they mark fundamental turning points.<\/strong>\u00a0Inflation today is going through one of these shifts, analogous to the 1970s. In that decade, inflation could be understood as a\u00a0play in three acts, a drama that is likely to be repeated in this cycle.<\/p>\n<ul>\n<li>In the first act,<strong>\u00a0inflation makes new highs<\/strong>\u00a0and the\u00a0<strong>Fed tightens aggressively.<\/strong><\/li>\n<li>The second is when\u00a0<strong>inflation begins to recede,<\/strong>\u00a0allowing the\u00a0<strong>central bank to pull back<\/strong>\u00a0from tightening.<\/li>\n<li>The final act is when we see<strong>\u00a0inflation return with a vengeance<\/strong>, eliciting a Volcker-esque monetary response and\u00a0<strong>a deep recession in order to fully snuff it out.<\/strong><\/li>\n<\/ul>\n<p><a href=\"https:\/\/www.zerohedge.com\/s3\/files\/inline-images\/2022-11-17_09-02-09.jpg?itok=dUDDMN9h\" data-image-external-href=\"\" data-image-href=\"\/s3\/files\/inline-images\/2022-11-17_09-02-09.jpg?itok=dUDDMN9h\" data-link-option=\"0\"><picture><img loading=\"lazy\" decoding=\"async\" class=\"inline-images image-style-inline-images\" src=\"https:\/\/assets.zerohedge.com\/s3fs-public\/styles\/inline_image_mobile\/public\/inline-images\/2022-11-17_09-02-09.jpg?itok=dUDDMN9h\" alt=\"\" width=\"500\" height=\"321\" data-entity-type=\"file\" data-entity-uuid=\"2cbf00e9-379a-4791-8f2b-400a813e31cb\" data-responsive-image-style=\"inline_images\" \/><\/picture><\/a><\/p>\n<p><strong>So what\u2019s brought the curtain down on the first act?<\/strong>\u00a0Three important indicators have made a decisive turn:<\/p>\n<ol>\n<li>The market is now ahead of the Fed\u2019s rate projections (the Dots)<\/li>\n<li>The real yield curve is emphatically flattening<\/li>\n<li>My\u00a0Advanced Global Financial Tightness Indicator\u00a0(AGFTI) is rising<\/li>\n<\/ol>\n<p><a href=\"https:\/\/www.zerohedge.com\/s3\/files\/inline-images\/2022-11-17_09-04-11.jpg?itok=FGnc0ftn\" data-image-external-href=\"\" data-image-href=\"\/s3\/files\/inline-images\/2022-11-17_09-04-11.jpg?itok=FGnc0ftn\" data-link-option=\"0\"><picture><img loading=\"lazy\" decoding=\"async\" class=\"inline-images image-style-inline-images\" src=\"https:\/\/assets.zerohedge.com\/s3fs-public\/styles\/inline_image_mobile\/public\/inline-images\/2022-11-17_09-04-11.jpg?itok=FGnc0ftn\" alt=\"\" width=\"500\" height=\"316\" data-entity-type=\"file\" data-entity-uuid=\"aad38d1c-029f-428c-835b-8f78ba4ac8ef\" data-responsive-image-style=\"inline_images\" \/><\/picture><\/a><\/p>\n<p><strong>All through this cycle, the market has been anticipating a lower peak rate than desired by FOMC members. That changed in the last couple of months,\u00a0<\/strong>signaling that Fed hawkishness\u00a0was peaking\u00a0as the market was amplifying &#8212; not inhibiting &#8212; the Fed\u2019s intended policy.<\/p>\n<p>The real yield curve had steepened relentlessly as shorter-term real rates kept falling while the Fed rate lagged inflation. But the trend definitively turned in July, pointing to a peak in the dollar&#8230;<\/p>\n<p>\u2026click on the above link to read the rest\u2026<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Regime Is Shifting, And Here&#8217;s What That Means Authored by Simon White, Bloomberg macro-strategist, The macro landscape is changing.\u00a0Inflation will remain in an elevated and unstable regime, but the first stage of the crisis is drawing to a close. That means the dollar in a downward trend, bonds in an upward trend, stocks underperforming [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[83,124,303,431,534,13351,33378,3650],"class_list":["post-64161","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bloomberg","tag-central-banks","tag-fed","tag-interest-rates","tag-monetary-policy","tag-price-inflation","tag-simon-white","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/64161","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=64161"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/64161\/revisions"}],"predecessor-version":[{"id":64162,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/64161\/revisions\/64162"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=64161"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=64161"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=64161"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}