Who are we trying to fool? Rising bond yields, higher for longer rates, recession fears, crashing consumption, yet stocks believing earnings could still push them higher? Are we at risk of a realisation moment and a repeat of 1987 or maybe something worse?
Normal Morning Porridge will resume later this week. I’ve been taking a short-break travelling round Portugal, and it’s an extraordinary place. The possibilities and opportunities confirm it's far too easy to simply dismiss Europe’s periphery as irrelevant.
The Bank and The Fed have served notice they will remain vigilant – higher for longer! Markets would be wrong to expect early easing. Wage Inflation and Energy remain very real threats over the medium term – it may trigger volatility as markets understand the new reality.
Many market participants fear the rising quantum of Government Debt spells crisis across the globe. Tush and Nonsense. Debt is not the problem – markets exist to price risk. The crisis lies in economic management, and Political Risk!
Rishi Sunak’s U-Turn on Net Zero is politically expedient, but raises serious long-term questions about the investibility of the UK economy and its place in the world, but… hey, it might just win them some votes (just don’t let your kids know!)
It’s International Talk Like A Pirate Day, which will make it interesting for UBS trying to persuade once-bitten, twice-shy investors to buy new AT1 CoCo Bond after what happened to Credit Suisse investors.. “Arrr… You know it makes sense, young Jim-me-lad… Shiver-me-timbers… “
It’s been a “meh” year for the UK markets, but they’re marginally up on the year. The outlook for a rusted economy, crashing discretionary spending, and an imminent housing collapse looks bad. As the UK electoral cycle kicks into high gear.. markets are in favour of change.
This week’s “shock” announcement of a major aero-engine maintenance crisis with RTX engines on Airbus Neo Narrowbodies is reverberating round the aircraft market. It pushes up the value of older aircraft – and will impact many airlines.
Are global economies heading for a soft or crash landing? Why the Republicans seeking to impeach President Biden have just played a brilliant short-term political hand, and what the ARM IPO tells us about gullibility in bubble times.
Markets are treading water trying to figure out directions – some of the underlying narratives look alluring, but they are not all they seem. In confused, uncertain markets, the trick is to remain suspicious of what others are following.
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