‘Stagflation’ fears haunt US markets despite Trump’s pro-growth agenda

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Stubborn inflation and President Donald Trump’s rigorous trade policies have resurrected stagnation concerns, causing a disturbing blend of slow growth and inflation that bothering the United States in the 1970s, even That markets are happy on its development agenda.

The potential return of stagnation, which will put pressure on a range of assets, has been flagged from time to time in the last 50 years, but it has not been put in place as a real threat to investors’ departments. Although economists and portfolio managers are unwilling to say that this time is different, in recent weeks the horrific scenario has returned as a significant threat to investors, because the possibility of trade wars and penalty taxes is the US The shadow has been put on the growth.

“The stagnation has certainly come back as a possibility because we have policies that can damage consumer demand while inflation,” said Jack Machantier, a portfolio manager of Brandon Global’s fixed revenue strategies Permanently limits the federal reserve’s capacity. ” “This is not the scene of zero occupation through a long shot.”

Earlier this month, when official data shows that consumer prices have increased consumer prices in January since August 2023, which in the fastest monthly pace of inflation in consumer prices From the rise, an important piece of inflation – inflation that refuses to cool down. Up to 3.0 %.

The second piece of the puzzle, US economic growth, is hanging in balance, Trump’s prices have threatened to increase inflation pressure, which can indicate the scale. Chief Investment Strategist in Innovator Capital Management. “Inflation is the sticky base that has to be countered, but in the upper part, taxes have the ability to slow down the economy by taxing consumers and weighing on profit and economic growth.”

The Global Fund Managers’ Bank of America survey shows the proportion of investors who expect a trend through the bank. The survey states that at the same time, investors were faster on stock, seen as a threat to a less likely than a trade war.

Although Trump postponed new taxes on imports from Canada and Mexico for a month in early February, it has imposed a new 10 % on all Chinese imports and announced revenue on global steel and aluminum imports Is

He has also called for his economy team to devise mutual rates projects on every country, which taxes US imports, and this week has said that they introduce 25 % of the taxes on autos, semidicators and pharmaceutical imports. Intended.

Some investors believe that any influence of development by revenue will be temporary. Medi Desner, head of asset class services in the Capital Group, said that more than a long -term horizon, prices can also boost growth, which will boost globally less competitive industries. On the other hand, their initial effects can increase prices pressure.

He said, “The truth is that it will probably happen between these two things. Last year, the Senate predicted.

‘Not right there’

Stagglation emerged as a source of anxiety, recently like 2022, when inflation rates increased and stocks and bond prices dropped, but this scenario did not produce because inflation was ease And the growth was flexible.

Many people believe that the US economy will once again be stagnant. Therefore, the so -called basic inflation is much lower than the level of about 3.0 % in the 1970s, when the annual rate of basic inflation is 7.0 %. Evercore ISI said in a recent note, this time inflation is “anchor style”, that is, the long -term inflation image is not ruthlessly fluctuating with every fresh piece of economic data.

Nevertheless, Moody’s chief economist, Mark Zindi, warned that the risks of stagnation in the market could be less understood. He said that the possibility of large -scale exile of workers of the visa or other work documents without another pledge of the Trump campaign would also promote inflation.

“Tackle and deportation are a prescription for inflation and injury growth. Both supply have negative shocks,” he said, adding that the increase in the price of crude oil, such as the negative shock of the supply, contributed to the stagnation of the 1970s. –

Ginte Dingra, head of the US prices strategy in BNP Prabus, said the market has been “satisfied” in the past six months, focusing on pro -Trump’s pro -policies. He said that stagnant-related investors can sell two years of treasures, which are likely to lose prices due to more inflation, and buy 10-year treasures that will take advantage of the low growth scenario.

Matthew Bartolini, head of SPDR American Research in the State, said interest in gold, which reaches another time height on Wednesday, shows that some investors are upset, because gold is a Is one of a handful of assets that is one of a handful of assets. Street Global Advisor.

Brandy Wine’s mechanic said the second major winner would be in cash, but he added that he was still withdrawing from making a big shift in cash -like fixed income devices. “I’m not there right now,” said the mechanic.