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.
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!
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.
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.
Bitcoin’s recent gains are about as relevant as Liz Truss. But banks, earnings, inflation, rates and investment remain critical. Now shadow banking investment is under threat – which isn’t going to help.
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 Fed tries to be dovish to calm market fears, but banking fears and inflationary threats on the economy may lead us somewhere new: A Stagflationary Bust!
Make the world a better place by enabling women on International Women’s Day! And, Bond Markets need to a rethink.
Markets have a habit of getting over-excited. They get FOMO and become over hasty. Although the outlook is improving, there is certainly little to justify some of the more speculative hype dominating market moves. Time a bit of rational thinking and common sense – consider Tesla as an example of misplaced hopes.
Around the globe everyone thinks inflation is beaten. It may well be, but the consequences will persist. Interest rates may not “pivot” the way market optimists hope, with profound implications for equities and bonds. We are into a new market cycle of normalised rates and corporate fundamentals. All-in-all, that’s a good thing for growth!