World to face repeat of 1970s global supply shock?

World to face repeat of 1970s global supply shock?

We could be headed for a massive repeat of the 1970s global supply shock, Chief Economist and CIO at Saxo Bank Steen Jakobsen believes.

"Today globalisation has reached its maximum, even without the trade spat," his Q3 2019 outlook for global markets reads. According to Jakobsen, "the making things cheaper process has run out of room."

The Chief Economist of Saxo Bank pointed out that "central banks wrongly focused on excessively low inflation." And now we get "a perfect storm brewing that will turn the tide back toward inflationary outcomes," he expects.

Jakobsen listed the factors, which, according to him, will create a "massive repeat of the 1970s global supply shock: anti-globalisation, higher unit cost of production due to environmental considerations, a fiscal push into infrastructure and shoring up injured global supply chains."

According to his forecast, the shock this time will come sometime after the global fiscal expansion set to arrive in the third and fourth quarter. By the next summer  everyone will be witnessing "extravagant spending driving inflation to levels beyond anyone’s expectations, just a couple of quarters after inflation, once again, has been pronounced dead," Jakobsen stressed.