Austan Goolsbee on How This Cycle Turned Out to Be So Different

Bullish:

• $HOUSING - While housing inflation has moderated, it's part of a broader trend of decreasing inflation across sectors, particularly in services and goods.

  • “Housing inflation has come down a bit, but the real answer is services inflation came down even more than we thought it would be able to, and goods inflation has come down and stayed down into the mild deflation that that it was before COVID”

    Austan·27:05

Bearish:

• $OIL - Potential geopolitical conflicts in the Middle East could lead to oil price spikes, resulting in stagflationary economic impacts.

  • “If you had war in the Middle East spreading to a big run up in the price of oil, we know we've seen that movie several times, and it stinks. You know, the the original was bad, and all the sequels are bad. It's a stagflationary impulse, and that's what would happen.”

    Austan·37:00
• $BONDS - The Fed's high interest rate policy has led to increased real interest rates, potentially impacting bond markets.

  • “We set the fed funds rate. We set it high and held it there for more than a year. And as inflation came down, the real fed funds rate just kept going up, passive tightening. That's the highest the real Fed funds rate had been in decades.”

    Austan·44:02