Expectations of early interest rate cuts are high, especially as recession signals are set to rise through Q1 2024. Will Central Banks stay the course and normalise interest rates, or will be take the easy option of further low interest rate distortion?
Jeremy Hunt tried hard to be interesting, but it was all a bit forgettable. An election is coming. How bad will it be? As for selling Natwest to fund UK growth – has Hunt actually considered the outlook for banks as the risk outlook deepens?
There is a crisis brewing – things are likely to get worse before they get better on the back of Political Dither, a Reverse Big Bang in the City of London, and the Escalation of the Middle East crisis threatens higher energy costs and inflation!
The threat list to global markets lengthens, but the Truth will be found in the bond markets. Like inflation and rising rates, the effects of a bond market slide are lagging – It’s going to take other financial assets time to catch up on the bond crash!
The Tough Times will pass - how do you then create an economy that balances Growth and Prosperity, Politics and Justice, the Environment and Business, Wealth and Equality. Could it be as simple as setting the right interest rate?
The markets are panicking about bond yields. There is little to panic about. Higher rates will normalise the economy – but the commentariat loves to make a problem into a crisis. Y’day the BBC got it badly wrong, confusing the cost of new debt with debt service costs.
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.
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!
Markets are at an inflection point: bonds are more attractive, but credit risks rise in a deflationary bust? Or should higher oil prices remind us what triggered inflation, and raise the risk of consequential Stagflation!
I’m polishing up my buying boots in anticipation of a fantastic buying window in the near future. All I need is the current everything bubble to burst under the deadweight of FOMO and unsustainable valuations! And things really ain’t looking so bad!
