Let’s talk stagflation as the economy is giving us contradictory signs. On one hand, inflation is heating up, on the other, economic activity is slowing down. We have not seen stagflation too often, so what does this mean?

Inflation data tells us that inflation is looking stubborn and persistent. Corporate earnings and employment surveys are telling us the economy is weakening (at least the consumption side of it). It is early, but if these trends continue, we may end up with stagflationary conditions. How long can the market ignore the economy?