The Old Age is over, and its welcome to the new, which is going to be little different – just a lot more complex. Thriving in a confused new economy of energy scarcity, inflation, recession and geopolitical threat isn’t easy – as the UK is about to discover.
The UK is at risk of breaking its “Virtuous Sovereign Trinity” of stable politics, currency and bond markets. Collapsing confidence in politics to stem the slide in sterling and thus Gilts, could see the UK stumble into a crippling Sovereign Financial crisis sooner than we think possible.
Everyone is balancing inflation, economic numbers and this week’s Jackson Hole Central Bank smooze-a-thon to guess markets. What if we are looking at the wrong things – and economic divergence, income and wealth inequality and unravelling domestic politics are the critical factors?
The pace of US CPI inflation moderated slightly, but it’s too early for the market to conclude rate hikes are over. There are many imbalances still to resolve – especially in consumer credit. Meanwhile, the new UK premier’s clumsy attempts to blame the BOE raise questions.
Harry Hindsight is the world’s greatest market trader – he’s circling round the opportunities presented by inflation and the risks its presents. He’s short bonds, credit, stocks, Brexit and the UK.
Dead Cat Bounce or a renewed upside trend? The range of opinions and views on where markets are headed is diverse and confused – will bonds and stocks recover, or will energy, food and inflation shocks further destabilise sentiment. These are dangerous times, but fools will always rush in.
Two simple questions for Central Banks; what was their plan, and what is it now? The consequences of 14 years of monetary experimentation are upon us. From Macro to Micro, Boeing is a sad illustration of the consequences of central bank policy.
Central Banks and Politics will be the dominant theme this week/month/year. Politicians are anxious to show inflation and recession are not their fault. Blame Central Banks! The Politics of Blame has profound consequences for markets.
The biggest risk to markets have always been policy mistakes by central banks and/or governments. The risks are rising as confusions about inflation abound. The reality is Central banks have tripped themselves – by assuring us inflation was transitory, they’ve pretty much nailed on its permanence!
The UK is going through periodic angst as everything looks terrible and we wonder how to balance the budget, pay the bills and avoid penury. Relax. We worry too much. Everyone else is cooking their national accounts. The UK can do it better. Buying Boots at the Ready!
