Recapping the case for a new economic era
Well done as usual. I appreciate the detail that you lay out. The excess liquidity in the system is not discussed anywhere, but here. Clearly this has caused the recession to be postponed, not cancelled!
Really enjoying your work Florian!
And I promise its not just because I tend to agree with you ;)
Impressive write-up; thank you for the analysis. You mentioned you expect "high nominal and real growth first, later followed by higher nominal growth only, a.k.a. stagflation" and indicated Large Cap Tech as the sole asset class that could benefit from both environments.
Given Large Cap Tech's valuations and regulatory risk, along with it potentially being a crowded trade, are you looking to buy value, small cap, metals, and energy because they offer greater potential upside?
What do you view as the largest risk to Large Cap Tech's investment outlook? Do you see Large Cap Tech as a possible low-risk, low-reward setup going forward?
Great piece, thank you. Treasury projects interest costs to be $865B for 2023, 1.4T for 2024 would be a gigantic jump. What drives that 1.4 figure - you assume increased bill issuance and Fed Funds rate at 5.5% all year? https://www.fiscal.treasury.gov/files/reports-statements/mts/mts0823.pdf
I guess this scenario implies a significant debt monetisation by the FED (and potentially runaway inflation)? As the size of the forecasted fiscal deficits would push most investors away
Thoughts on how this will effect FX? Surely hugely dollar positive vs. rest of world. Thinking about the dollar smile - outperforming US growth / exceptionalsim while ROW lags.