Trade War Could Cause Inflation Shock, Says BMO's Davis

The video discusses the performance of TIPS compared to treasuries, highlighting that TIPS are expected to outperform in both rallies and sell-offs. It explores four market narratives: inflation, growth, risk off, and fiscal, and their impact on bond yields. The discussion also covers fiscal policy's influence on tax cuts and the uncertainties involved. Strategies for reacting to market changes are outlined, emphasizing the importance of recognizing when a narrative has ended. The potential for inflation and growth shocks is examined, with a focus on how COVID-19 has conditioned consumers to accept price hikes and the role of quantitative easing in shifting from growth to inflation shocks.

What are the four possible narratives mentioned that could affect the market?

How do inflation and fiscal narratives impact bond yields according to the text?

What is the significance of the statement 'you hope for the best, prepare for the worst' in the context of market reactions?

How does the text describe the relationship between tariffs and inflationary fears?

What factors could potentially change the situation from a growth shock to an inflation shock?