Out of the Frying Pan?
The easing of relative risk over the last month is likely due to relative normalization rather than improvement in the underlying factors.
Growth is expected to slow in the 2nd half of ‘22 due to inflation and supply chain issues, and global energy markets will remain fragile. Even if domestic production and reinstatement of the export ban de-link the U.S. from international markets, it could take a quarter or more for prices to stabilize, impacting multiple sectors, including agriculture and transportation.
While interest rates will likely rise by 75 bps or more, central bankers have painted themselves into a corner. In addition, political divisions leading, regulatory uncertainty, and geopolitical challenges are likely to be a story for the rest of the year, if not longer.
THE 375 PARK COVID MODEL FORECASTS ~ 99MM CASES (+3MM FROM JANUARY ‘22) AND A cCFR OF 1.3% (+0.2% FROM JANUARY ’22) IN THE U.S. BY JULY ’22.