While the rest of the world hiked to fight inflation, China has embarked a sprint to reopen the economy; easing rates, mortgages, property lending and loans. The question is can it succeed when demographics, trade and the laws of growth may have already moved against them?
Markets love drama… from the next corupto-coin exchange to collapse, rising interest rate threats, and riots in China in the face of a Covid meltdown. But drama and reality seldom coincide – events are more prosaic!
The Fed roiled markets over the pace and scale of rate hikes, but ultimately markets are about growth. The big issues were not thinking about enough are global recession, slowing trade, and the threats China’s evolution into a Surveillance State raise for future growth.
Halloween is a great time to be scared about markets. They are inconsistent, confused and uncertain, but the reality is even rising interest rates, inflation and trade wars sort themselves out - eventually. The real danger is how much worse bad politics and make a scary situation absolutely frightful.
When the fact change, change strategy. The enthronement of Xi Jinping represents such a moment – and comfirms the big theme for coming decades: The Middle Kingdom vs the West.
Stock markets may be crashing on inflation fears, but watch the Putin Xi summit in Samarkand tomorrow as the critical event this week. Is China prepared to reinforce Putin’s failure – and what does that mean in terms of risk?
Chips are a critical component of global supply chains – there are significant geopolitical risks inherent in the concentration of semi-conductor production in Taiwan. However, an even bigger geopolitical risk may have been triggered by the FBI raiding Trump’s lair in Mar-a-Lago.
So many contradictions abound in current markets, but it’s possible to cut through the noise to discern some probable direction. The old adage of being confident while others are fearful looks one way to approach the current confusion.
Blain’s Morning Porridge – July 13th 2022: How long and deep is Inflation, and how close is China to a…
Calls to break up HSBC to realise the value of its Asian franchise are a critical moment for the bank as it pays the costs of being too big, too bureaucratic and for the inability of management to spot its critical weakness…..