There are two core dynamics that have kept inflation sticky: fiscal policy and demographics. Neither looks set to reverse. The Fed and the market have yet to acknowledge or understand either.
I have written a number of articles on demographics, as it is a core focus of mine. Below you can see them all. In this note, I will quantify the forces of demographics on inflation in a way that will give huge edge in many future cycles.
The Case for Higher for Longer Interest Rates was one of the first notes I wrote, and explained demographic analysis.
Neutral, where are you? touched on demographic forces impact on the neutral rate, an area I still think the Fed and markets are misjudging.
Structural Forces quantified the demographic forces into a fair value model for the 10y.
Doomsday and the Demographic Time Bomb focused on baby boomers and the risk of an unwind of their large asset portfolios.
Missing Bodies was a focus on immigration and labor supply and how limiting both raises the burden on the working population.
Let’s get to it.