“The soft landing is still our base case but the runway is getting shorter and narrower,” as Nuveen’s chief investment officer Anders Persson put it last month.
However investors’ confidence in that glide path is now evaporating. At this rate, that short, narrow runway will be surrounded by shark-infested waters and beset by hurricanes. “Policymakers have lost control of the narrative so they have to act, but they would be geniuses if they can soft land this thing,” says Kit Juckes, macro strategist at Société Générale. Juckes recalls that on a recent trip to see investor clients around Europe “every single one thinks there’s going to be a hard landing”.
Personally, I think this theme could be made even more engaging if Powell donned a uniform and aviator sunglasses for his press conferences — but so far, no joy.
In his latest pronouncements on the matter this week, the Fed chair effectively told passengers to brace for a rough ride. Tackling inflation “is highly likely to involve some pain”, he said at a central banker get-together in Portugal.
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