Musings of the Day, 5/1/26:

I think this is very interesting.

Just a scant two months ago, we were in a Goldilocks Disinflationary Growth environment, which was my Base Case for the Trump 2.0 Playbook.

Alas, the Oil Shock from the Iran War has very quickly tipped us into the Stagflation Quadrant, since high Oil prices stoke Inflationary pressures and simultaneously blunt Aggregate Demand and Consumer Confidence.

The Trillion Dollar Question is whether a quick resolution can just as quickly revert us back to the Goldilocks Quadrant.

The opinions I get on this are almost 100% correlated to political views on Trump, but I am trying to be objective.

I am cautiously optimistic that it could happen, but I hedged by buying puts. I will note that the stock market sneered at my puts and seems to think Goldilocks is achievable as well.

I encourage you to check out this function for yourself from time to time on urbankaoberg.com!