Throughout this year we have seen Wall Street equity strategists make a hash of things. We have seen two narratives dominate:
- Good news is bad news as reopening and reflation drive inflation higher and stocks lower which has been wrong. Held most obviously by BofA.
- Bad news is good as reopening and reflation drive a temporary spike in inflation that will collapse and continue the stock and commodity rally. Held most obviously by Goldman.
- Good news is good news as reopening and reflation drive a temporary spike in inflation that will collapse and reverse the value to growth as commodities crash. Held most obviously by yours truly.
- Bad news is bad news as reopening and reflation drive a temporary spike in inflation that spooks central banks and they commit a policy error that compounds the coming Chinese slowdown, crashing stocks. Also held by yours truly as a concerning risk case.
Today, these narratives continue but they are fraying badly all over the place as MB’s forecast factor-styles move center stage with peaking inflation triggering a “growth” stocks pain trade.
