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The more participants talk about their pressing concerns, the less pressing those concerns actually are. Markets are forward looking, and anything that is known is priced in and — in theory — should not influence future returns. This therefore suggests that whatever we are panicked about is the very thing about which we should not worry when considering the next investment decision. I suspect this is where we are with inflation.

The search intensity for the word “inflation” is the highest it has been in worldwide Google trends. You can barely read an article in the financial press that does not mention inflation. In the same paragraph, if not the same sentence, will come the word recession. A little further and, depending on the sophistication of the commenter, you meet the word stagflation. None of these words is good for financial markets, and worries about this particular toxic macroeconomic backdrop explain the bear market playing out in risky assets as we speak...

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