Goldilocks After All?

Offline, I have been a persistent critic of what I considered Pollyannaish predictions coming from financial talking heads like Don Luskin or Larry Kudlow. The PermaBulls seemed to be completely ignoring the fact that the economy was heading into stagflation.

Moreover, if the modern FED was faced with choice of having to drag the economy into a bone crushing recession or tolerate a mild recession with persistently high inflation then you need to prepare yourself for some major fractures.

Memories of the Great Inflation are far more salient than the Great Depression. More importantly, no one doubts the ability of the FED to stop inflation. How well they can navigate the murky waters of exogenous supply shocks is less clear.

However, that all might, and I say might, be wrong. I am not quite ready to jump into the bull camp just yet but the latest economic data does induce a sigh of relief.

But then again if even I'm feeling bullish maybe this is the time to get out!