Brave New World: Indian economy staring at stagflation; Fed’s balance sheet shrinks – Economic Times

Ritesh Jain, a Dalal Street veteran, trend watcher and Global Macro Investor, captures global macro investment opportunities and economic, business and financial trends with charts and commentaries in this space.

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Stagflation fears
Indian economy is staring down stagflation, as an alarming deceleration in growth collides with rising prices. Headline inflation surged to 7.35% in December, the highest in five years. The following chart is something straight out of an economist’s nightmares:

Crop yields are going down
Corn and wheat crop yields are going down as per the latest data from the USDA.

Fed’s balance sheet shrinks
Falling repos, surging T-bills, slowly rising coupon Treasury securities, falling MBS, and other activities reflected on the Fed’s balance sheet, all combined, have caused total assets to decline by $30 billion over the seven-day period to $4.146 trillion. This is down by $20 billion from the balance sheet four weeks ago, on December 25:

Credit rating downgrades