A Musky yellow flag for the markets?
A whiff of stagflation – Michael Roberts
“…in the major economies, there is an increasing whiff of stagflation – i.e. low or zero growth alongside rising price inflation. And this is before the inflationary and growth hit that could come if Trump implements his import tariffs and government spending cuts measures over this year...
“To repeat what Ruchir Sharma, chair of Rockefeller International, said recently. He called the US stock market boom ‘the mother of all bubbles‘. Let me quote: ‘Talk of bubbles in tech or AI, or in investment strategies focused on growth and momentum, obscures the mother of all bubbles in US markets. Thoroughly dominating the mind space of global investors, America is over-owned, overvalued and overhyped to a degree never seen before. As with all bubbles, it is hard to know when this one will deflate, or what will trigger its decline.‘
“The major economies are exhibiting signs of stagflation. That means interest rates could stay high, while economic growth goes missing. That is a recipe for an eventual crash in financial markets.”