The World shifted over the weekend. Trump’s 100% China Tariff threat was a snap reaction to the reality is China is now the key power in global trade, and holds most of the cards. There are significant risks ahead, not the least being the AI bubble popping – which would kill US sentiment as the whole stock market edifice will trumble.
The Gaza deal is an extraordinary win for President Trump. Banging heads together worked – and may have created conditions for the Middle East to move towards reconciliation. But, we had another “judder” moment as the trade conflict he triggered with China threatens to overturn the USA’s economic resilience.
We’ve seen all the signs of crisis to come. Exuberant markets priced for perfection, valuations at mindboggling levels, AI spending trillions to make millions. Yet Gold, the universal risk-off asset just hit $4000. Wake up, smell the coffee…. While you still can..
The debt crises that apparently threaten to engulf Paris and London are very, very different. Paris is in genuine financial and market trouble. London has a perception problem. Both crises are rooted in political/fiscal miscalculations and the widening polarisation between political populism and conventional politics. The crisis in Paris is very real, but the one in London is largely driven by Doom-Scrolling financial misdirection of doubtful right-wing provenance, looking to snipe the centrist Labour govt.
What’s not to like about markets which keep going up? Lots of participants are increasingly certain the current upside momentum is unstoppable. Some of us suffer from the problem of thinking too much and wondering if its sustainable. Being a bear can feel very lonely.
Fascinating times we live in. Democracy is struggling. Nations are caught with crippling budgets, unpayable debt, and gridlocked political systems that mitigate against solutions. Don’t you hanker for the old days, when the king could just lop of some heads to make things happen? That’s one solution for the USA, according to some.
What if we are completely wrong about AI? A revolution in how tech is being innovated across the economy is clearly happening – but what if we’ve got the winners and losers wrong? What if we’ve misjudged how AI will evolve as companies and individuals innovate AI solutions for themselves, seeking to preserve their data sovereignty and control of their systems?
Labour declared war on Reform yesterday. Is it a battle they can win? Populism trounced the ill-prepared conventional Democrats in the USA last year. UK Gilts are relatively stable, showing markets are not particularly concerned – yet. Little is known of Reform’s non-immigration or Europe agenda. Can Labour regain the initiative?
Reform has persuaded UK citizens their dismal lives are due to immigrants, but the truth is far more prosaic. The quality of life in the UK’s big cities is tumbling due to chronic under-investment over decades, while the plight of young workers in finding accommodation security to build careers and families is the real policy failure.
The Age of Steam was perhaps the most influential technological paradigm shift since the innovation of agriculture. Railways and Steam Ships made the World smaller and fostered global growth and industrial innovation – leading to where we are today, perhaps on the cusp of the next big leap forward; AI technologies (although I would argue they are just the evolution of computing!)
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