Ed Elson

at granola.ai slash markets.

We're back with ProfgMarkets.

It sounds like we believe that ultimately when it comes to markets, I mean, there are many reasons why this is important for reasons totally aside from markets.

But it seems as though the big implication is what this ultimately does to inflation and what those inflation expectations do in terms of the Fed's decisions.

And that seems a little bit stupid when you say it out loud, but ultimately it does seem like that is what's going to determine the markets over the next year or so.

Okay.

It's very clear to me how that would all play out.

I mean, that's at least where my mind initially goes here.

It's like, okay, we've had these escalations in Iran.

Yes, the Strait of Hormuz is supposedly open now, but they're also charging millions of dollars for every ship that passes through, and then they're also closing it every other second.

In Bitcoin.

In Bitcoin, which is a whole other thing to talk about.

But it seems to me that this generally leads to elevated prices,

at a general level, no, we're not going to have $150, $200 a barrel of oil, but certainly it seems like oil prices are elevated.

Certainly it seems like gas prices are elevated.

Certainly it seems like fertilizer prices are elevated, leading to elevated food prices, etc.

And we are now seeing inflation expectations from various institutions.

We were looking at Bank of America, who put inflation above 4% by the end of the year.

Does that then lead to lower growth, which then leads to more layoffs because that's what companies are going to decide is the right thing to do in that environment, which ultimately sounds like, okay, that's a recession.

That's where my mind goes, at least.