Markets remain obscure and uncertain, but the UK’s virtuous sovereign trinity and financial exceptionalism is at stake as political graft mounts and a previous financial scandal comes back as a new one – the Libor Scandal needs investigation.
Markets are focused on the immediate debt-ceiling crisis, and the short-term game of guessing rates vs inflation. Down the line are the bigger challenges of the medium and long-term: issues we need to be investing in now to garner long-run returns or just to survive!
What does £5.40 a coffee tell us about the economy? That inflation is sticky. Do we face a stagflationary bust or a reflationary boom? Either will mean Central Banks have failed. At the heart of today’s economy are a succession of issues to resolve – not least is the need for a reset on corporate behaviours to drive stable growth.
The Market Commentariat think deflation will counter inflation, rates will fall, and recession will be limited. The world is more complex - supply side factors are more volatile. Stagflation is a more likely outcome than recession.
Don’t assume inflation is licked, don’t assume interest rates will stop rising, don’t assume there aren’t further bank failures to come, don’t assume politics and society will cope well, but don’t assume it’s all end of the world. In periods of financial uncertainty there is opportunity…
Markets are confused by rates, inflation and recession risks, wondering what central banks will do. The smart money gets it – Central Banks are on top of this, and have the fine controls to avoid crises becoming catastrophes. Meanwhile… why is my drinks cupboard full of craft gin?
esterday’s US CPI numbers look good at a glance, but the reality is the Western economies may face ongoing sticky inflation and long-term stagflation while reversing the economic damage of a decade plus of monetary experimentation. That requires new investment approaches.
Q2 opens up with a new oil shock, but after the volatile start to 2023 what will roil markets next? Might it be further geopolitical instability?
Markets are taking a breather after the recent wobbles, but the threat board has never looked, well, more threatening! Relax. Go see Guys and Dolls instead and treat yourself to a great night out.. tomorrow it will be miserable again!
The Media love financial crisis – it sells. The reality is the need to understand, plan, prepare, and don’t expect anything you expected to happen, happen. Enjoy. Sun comes up tomorrow.
