Emperor Xi’s brief trip to Europe has apparently achieved little – but he’s made clear China is open to dealing with Europe – on its terms. He can wait: the global economy is increasingly transactional and the US / Yoorp relationship is under stress. If China needs to flex some muscles and break things to get the message across – they will.
The UK’s general election will be the most critical moment in UK politics in decades. The key point will be for prospective new Chancellor Rachel Reeves to persuade global markets the UK is investible. She needs to be absolutely clear on her plans and engagement.
It’s become clear this week the market outlook has changed utterly – higher rates are now the new normal, and that will have consequences on demand at a time when supply remains in flux. Meanwhile, global instability is rising. Markets and populations need to understand reality – while campuses tear themselves appart it is Iran driving the horror in the Middle East, but good luck explaining it to your Keffiyeh wearing kids.
This is the outline of a talk I've been giving in recent months on the dangers of ignoring the behavioural lessons from the QE Era as policy makers get ready for the inevitable next financial crisis. The great thing about financial crises is there will always be another one - no point panicking today when you'll get to panic again tomorrow!
Whatever the Fed says or does today, markets have reached a cusp. How will they adjust to the reality of new higher, normalised interest rates: throw their toys out the pram, or acknowledge higher rates are the building blocks of a stronger economy?
The SNP hit rock bottom yesterday with the resignation of Humza Yousaf. There is only one way to go after that – which may be bad news for Labour. Scotland is an example of what happens when a proud people are captured by a populist illusion. Yet, any Scot will never stop wondering… what if.. what if…
This week will be about US bonds – watch carefully how the arguments develop as we sit at a new cusp for markets. In stocks it’s about narrative and I can’t help but wonder if we’re about to see a corporate denouement as Tesla does a “deal” to map China to boost its FSD ambitions.
For the past 14 years UK Railways have been in decline – more costly, less reliable, more fraught. They are evidence of Broken Britain. The Labour Party has announced plans that amount to re-Nationalisation. They are prudent, sound and address the problems of failed railway privatisation in a reasonable manner… Can they do the same with the whole broken economy?
The Bank of England is concerned about financial institutional risk associated with the rapid growth of private capital markets. A PE or Private Credit market crash would trigger a liquidity event which spawns crisis, but also massive opportunity. It will be yet another consequence of regulation and mispriced money in the wake of the 2008 GFC!
Today the markets will be focused entirely on Tech earnings and future income expectations. Smart money watches Supply Chains more carefully – and critical to global supply chains is China. While the West is focused on Demand, Asia is thinking about the security of supply.
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