The Silver Bullet - No. 8

Paradise City

2024 won’t be the year central banks win against inflation. That was last year’s story.

This year will be a test for democracy – and governments will keep over-spending to pass this test. From the developed world to emerging markets, over half of the world’s population will head to the polls in the next twelve months.

What policies will people vote for?

Paradise City

Last October, we called to buy credit and flagged the attractive risk premium in Europe particularly, in a context of no recession and stable growth. Today, we see investors and markets have swung from fear to greed, and with central bankers signalling rate cuts, stocks, credit and bonds have become priced for perfection.

We expect no slowdown and no economic landing.

We believe the current narrative discussing soft/hard landing is misguided and corresponds to traditional late-cycle economics. Since the first Trump administration and post-Covid, fiscal policy has become pro-cyclical, and economic cycles over-extended. We expect above-average growth and above-target inflation in the US, and more outperformance between the US vs Europe/Asia.