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.
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 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.
Everyone seems worried about the sustainability of Sovereign Bonds in terms of rising rates, interest burdens, debt quantum, and who will keep buying. Relax. Bonds have weathered worse. But there are ways to use Sovereign debt better.
Phillips Curve economics calls for higher unemployment to calm inflation. Great plan says The Bank and Chancellor while consigning millions of UK citizens to penury. We need something better than wrecking lives and the economy.
As we wait for The Bank of England to address the latest inflation miss – consider Pencil Complexity Theory, Cucumber Inflation Modelling and why Wimbledon will be Hell this year.
The UK housing market is at its’ highest income multiple since the 1850s, at a time when real incomes have flatlined for 2 decades, and mortgage borrowers are levered higher than ever – its set for a wobble, sustained only by supply shortages. If it crashes.. all bets on the UK will need re-examined.
Yesterday’s UK inflation numbers hint the Bank doesn’t understand the modern drivers of inflation or how to address them. It leaves some stark likely outcomes: stagflation or a Reflationary Death Scramble. Neither are good.
Two parts this morning: What the Bank of England actually said, and The Big Lesson from the Ukraine War is simple: “Things are seldom as bad as we fear, but never as good as we hope.” Global geopolitics and markets have taken a knock, but will coalesce around whatever new global links emerge.
By some freakish temporal rift, a Morning Porridge from 10-years in the future was delivered into my email box last week – describing the monumental political and economic events of the last decade… Freaky eh? Who would expect such a thing…? It happens…