Pushing back a little: the disinflation talk is great, though not enough space is given to the inflationary risks which we are already seeing: Apple raising its prices. The price composition of an iPhone (they have not raised prices on this one yet in order to preserve consumer sentiment) has gone through the roof. That is just one company, a major one with huge market power. I get that we have to look optimistic, but there are already signals from S Korea especially that regardless of the price of chips (huge price increase y/y), someone wants to buy them.
Fair pushback, and Northern Trust AM would agree with you. Their piece makes exactly this point: the AI wave is colliding with constrained chip, energy and construction supply before the deflationary benefits arrive. Apple's pricing power and South Korean chip demand holding despite price increases are precisely the signals they flag.
The question is not whether these pressures exist, they clearly do, but whether they are temporary cost pass-throughs or a sustained inflation regime. Northern Trust puts 40% on a two-speed expansion where both dynamics run simultaneously. That may be the most honest answer available right now.
Pushing back a little: the disinflation talk is great, though not enough space is given to the inflationary risks which we are already seeing: Apple raising its prices. The price composition of an iPhone (they have not raised prices on this one yet in order to preserve consumer sentiment) has gone through the roof. That is just one company, a major one with huge market power. I get that we have to look optimistic, but there are already signals from S Korea especially that regardless of the price of chips (huge price increase y/y), someone wants to buy them.
Fair pushback, and Northern Trust AM would agree with you. Their piece makes exactly this point: the AI wave is colliding with constrained chip, energy and construction supply before the deflationary benefits arrive. Apple's pricing power and South Korean chip demand holding despite price increases are precisely the signals they flag.
The question is not whether these pressures exist, they clearly do, but whether they are temporary cost pass-throughs or a sustained inflation regime. Northern Trust puts 40% on a two-speed expansion where both dynamics run simultaneously. That may be the most honest answer available right now.