Skanda Amarnath

The first thing you do is don't underestimate their scale and duration, which I think is a big part of what got in trouble in 2021 and 2022.

These things can last a lot longer than you think because they take a long time to travel through the value chain.

Different companies are moving their margins.

The scale of this stuff can be a lot larger than you think in real time.

So don't go in basically underbaking these forecasts.

It doesn't really.

But the biggest issue is that the Fed has been underbaking where inflation is supposed to be by this point.

And when you keep making the same error, you're liable to say, oh, I must be missing something really big.

I must need to raise interest rates to keep inflation expectations anchored.

And I think we're headed down this path.

I mean, I'm basically being bearish about the Fed because of the reasons Neil pointed out, which is that they are going to confuse this stuff.

They're going to look at the inflation data.

They're going to say, oh, it's hot.

It's hot for so long.

It's in too many different components.

Because it's so broad, because it's lasted so long, it therefore must be something we have to do something about.

It's kind of the cowardly compromise of saying that there is either going to be a set of hikes, right?

If Fed's going to hike once, they're going to hike multiple times.

Or they're just going to stand pat.

I think it's going to be hard for them to steel themselves through what might be some more inflation and a broader pickup.