Welcome back from the weekend. Stagflation, the dreaded combo of weak economic growth and high inflation, is on everyone's mind.
People often point to the 1970s for comparison, but here's how this time might be different.
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1. Stagflation might look different this time around. The spike in the price of things like oil, wheat, and many metals has been a big story during the pandemic, and has been exacerbated further by the war in Ukraine. These pricing pressures have sparked a wave of warnings that inflation is here to stay right as economic growth is set to slow.
But according to the Bank of International Settlements, this time could look different compared to the last notable era of stagflation.
"By some measures, recent events look even more disruptive than those of the 1970s," the report reads. "For example, recent price increases have affected a broader set of commodities. Commodity price rises in the 1970s were concentrated in oil markets, whereas in recent months energy, agricultural, commodity and metals prices have all experienced strong gains."
But while these commodity shocks might be more severe, the outlook isn't totally grim, BIS said. For one, inflation is less severe than in the 1970s. Also, economies are less energy-intensive now. BIS estimated that the amount of energy consumed relative to GDP has fallen by around 40% since the late 1970s.
Finally, central banks are better equipped to respond to crises than in the 1970s. For these reasons, BIS says this crisis should be less intense than the 1970s.
In other news:
2. US stock futures rise early Monday, after President Joe Biden said he would consider cutting the US tarriffs on Chinese imports imposed by the Trump administration. Bitcoin also recovered to $30,000 over the weekend. Here are the latest market moves.
3. On deck today: Zoom Video Communications Inc., XPeng Inc. Advance Auto Parts Inc., all reporting.
4. UBS has some stock picks if you're worried about stagflation. Strategists at the Swiss bank said that some names can still thrive in an environment of slow growth and high inflation. Check out the list of their 34 top picks.
5. China has ramped up its buying of Russian oil. The Russian ally is purchasing nearly 1.1 million barrels per day of discounted Russian crude. That's up from 750,000 barrels a day in the first quarter.
6. Billionaire investors Stanley Druckenmiller is shorting the S&P 500. His family office revealed in an SEC filing last week that it purchased thousands of put contracts on the SPDR S&P 500 ETF. Read about the bet here.
7. Joe Biden announces major Asia economic deal. The Indo-Pacific Economic Framework is part of an effort to boost the US' economic leadership in the region — where China is one of the dominant countries. Here's everything we know about the plan.
8. A top JPMorgan Private Bank strategist says the US will avoid recession. Tom Kennedy says that even as housing cools and rates rise, there is still a two-thirds chance the economy doesn't hit a downturn. Here are his tips to position for 19% upside in stocks in this period.
9. There's a case to be made for investing in real assets right now. That's according to Goldman Sachs, which says the asset class could be investors' way to weather inflation. Read the firm's top picks for real assets here.
10. There are two reasons the US has a housing shortage. The pandemic home-buying frenzy was a wild time for the US real estate market and highlighted the big imbalance of supply and demand for homes across the country. Read why this is happening — and why it will be hard for conditions to improve.
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Curated by Max Adams in New York. (Feedback or tips? Email [email protected]) Edited by Hallam Bullock (tweet @hallam_bullock) in London.