Taps Coogan – February 3rd, 2023

Enjoy The Sounding Line? Click here to subscribe for free.

Viktor Shvets, global strategist at Macquarie Bank, recently spoke with Macro Voices about his outlook for geopolitics, inflation, and markets in 2023 and 2024.

The wide-ranging interview doesn’t lend itself to excerpts but the various punchlines are that Mr. Shvets sees a stalemate developing in Ukraine that lowers geopolitical tensions, a drop in inflation, more ‘fat-tailed’ shocks against a deflationary backdrop, and thinks that the global economy will skirt a mild recession this year. He says interest rates have likely peaked for this cycle, that emerging markets are well positioned, and that most of the market pain is behind us (assuming inflation drops as he excepts).

For what little it’s worth, I couldn’t disagree more on the geopolitical front and find that absence of further escalation of conflict from his lists of potential causes of higher inflation and “fat tailed” risks fairly conspicuous given that war is one of the ‘fattest tailed’ human phenomenon and also a classic cause of inflation. Otherwise I think his description of this decade as one filled with ‘fat-tailed risk’ but a deflationary backdrop as quite well put.