The panel was moderated by Tyler K. Wood, managing director at the CMT Association. Panelist Jurrien Timmer, director of global macro at Fidelity Investments, said that the bond market is signaling that the current high inflation will eventually revert to 2.5 percent, assuming that the disinflationary regime of the past few decades will continue. But the market is extrapolating from the past.

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According to James Bianco, president of Bianco Research, “It’s a difficult call to say that if inflation goes down to two percent, it will also stay there and not start drifting up. And can it reach that low point without a recession?”

The panelists looked back to the Dutch tulip bubble of the 1600s and the British bicycle craze of 1896, but also much more recent experiences—such as the 1960s mania for electronics stock and the crypto bubble of 2021—to learn from history.

Bianco pointed to the long-lasting post-World War II boom, which didn’t really start until 1951, following an inflationary period. We could be in a similar era of uncertainty in the post-pandemic era, he said. “Slowing down the world economy had serious consequences,” he said. “We may be digesting what happened before we start to move forward."

Will there be a recession? Bianco said that the natural state of free market economies, 80 to 90 percent of the time, is to expand. “A recession is an episodic event that is hard to predict,” he said, pointing out that one indicator—the bond market—has been “all over the lot.” Timmer agreed, adding, “The yield curve has a perfect track record of predicting recessions, but the timing and magnitude of the outcome are notoriously dispersed. It’s not a simple timing tool, especially if the outcome has already been priced in by the market.”

The banking crisis could metastasize into a full-blown credit crunch, or it could become a “summer storm,” Bianco said.

The GAME forum drew more than 1,300 participants from 120 universities. There are 30 panels, over 100 speakers, and 77 companies represented.