Views on stagflation: Higher inflation and weaker growth
|S2N spotlight
I am currently writing a long-form article on this subject for a publication, but I thought I would share the gist of it here, as it will mark a trilogy of me discussing the golden cross.
What I have done is I have applied a 50-day cross of a 200-day simple moving average across 7 world stock indices. The choice of the indices is instructive, not complete. My thesis is that almost all the people I come across think they can pick and choose the index that works best for them after doing a backtest. This is a mistake; Taleb would describe it as fragile. It is not research; it is wishful thinking.
You will be hearing more from me on this subject in the coming weeks and months. The way to approach strategy development is to make the strategies anti-fragile, quoting Taleb again.
What you see below is the portfolio return of a moving average cross strategy. Most people will choose the individual backtest, i.e., the S&P 500, and say they have a strategy that makes an excellent return. Most don’t realise they have been fooled by randomness. Taleb quote number 3.
S2N observations
I have not changed my views on stagflation. I see higher inflation and weaker growth.
Facts don’t care about my opinion, but they are starting to line up in the numbers, slowly but surely.
In the name of contradiction, I thought I must share a chart that paints a completely different picture. The Bloomberg Commodity Index is in a multi-decade bear market and continues to look weak. It looks like inflation is coming from other places, such as wages, services, housing, weaker currencies, etc...
S2N screener alert
Copper breaks its all-time record with a 13% daily rally.
S2N performance review
S2N chart gallery
S2N news today
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.