Inflation is the most important thing, but it depends on the central bank. In Europe, the mandate is clear (CPI target), and central banks will respond with demand destruction via rate hikes already priced by the market.

Highlights the difference between the Fed's dual mandate (where labor markets matter more) and the ECB/BoE's explicit inflation targeting.

Yes, we are underestimating. The US economy is resilient. The risk is pricing in more aggressive Fed rate hikes than currently credited.

Cites colleague Stephen Rostow's view of no Fed cuts this year (pre-war). Warns that a new Fed chair may not deliver hoped-for cuts, and the FOMC might discuss raising rates.

The oil shock extends beyond energy to polyester, fertilizers, helium, clothing, plastics, and food, creating broad second-round inflation effects.

Criticizes economists for focusing only on energy and ignoring these broader channels. Raises the risk of a prolonged war extending these pressures.

Yes, for trading it's a valid playbook. Currency and credit markets are following 2022 price action closely.

Acknowledges economists argue differences (fiscal policy, job vacancies, China supply chains) but emphasizes elevated inflation expectations and firm pricing power make this a precarious time for central banks to call inflation transitory.

Dollar appreciation depends on war duration. If over soon, EUR/USD could head to 1.16-1.18. If it persists to July/September, forecasts lower to 1.10, then parity.

Current view: EUR/USD to 1.12, then 1.10 if war continues. The terms of trade shock (from energy) is buffered by already-priced ECB/BoE rate hikes, but could eventually overwhelm the interest rate story.