Financial markets have been going nowhere fast this year. In part, this reflects a deep division among market participants about the economic outlook. Some warn of inflation while others smell deflation.

The arguments marshalled on both sides are strong. So much so, that while views are strongly polarised, the reality could be an uncomfortable sequence of inflation followed by disinflation and perhaps even deflation. This is not good news for stocks, bonds or the financial sector. The nightmare on Wall Street is not over yet.