Economic Stagnation Coming 2 EU & US…
The EU’s latest hare-brained gambit is likely to put further downward pressure on economic activity while exerting further upward pressure on inflation, making stagflation all but inevitable.

Official inflation reached new record highs in the Euro Area in the month of May, clocking in at 8.1%, well above the consensus estimate of 7.7%. In six of the 19 Euro Area countries the “harmonized” (calculated the same way for all countries) inflation rate was in double digits: Estonia (20.1%), Lithuania (18.5%), Latvia (16.4%), Slovakia (11.8%), Greece (10.7%) and Netherlands (10.2%). The three Baltic States, Estonia, Latvia and Lithuania, were the first EU Member States to stop all imports of Russian oil and gas, which they did in early April.…
Stagflation Threat Soars As Manufacturing Surveys Show Soaring Costs, Weaker Jobs

Under the hood of the PMI report, things were even worse with the smell of stagflation in the air as cost inflation soaring at its fastest since Nov 2021’s all-time high and production and new orders slowing. Additionally, backlogs dropped to their lowest since Feb 2021.

Inventory additions appeared to provide support for ISM’s surprise gains… and while the PMI report showed new orders slowing, ISM reports new orders rising…

But, the ISM report added to the pain with prices remaining at near extreme highs (and printing hotter than expected), while ISM Employment tumbled to 49.4 (in contraction for the first time since Nov 2020)


The economic stagnation that is coming is part of the Federal Reserve’s plan. They are raising interest rates to deliberately cool the economy. The markets will see the slowing in a positive light because the Fed will not feel forced to raise interest rates higher and for a longer time if the economy slows gradually along with inflation.