The Fallout from SVB has only just Begun
Swift Action by the Fed and around the globe has averted a major tech catastrophe, but the Silicon Valley Bank debacle highlights failure and further crisis to come. Hard Hats Stay On!
Blain's Morning Porridge
Financial Commentary for Smart People
Blain's Morning Porridge
Financial Commentary for Smart People
Category Economy
This is not about Banks – This is a Valuation and Private Asset Crisis
Markets are in a fluster over US banks, but that’s not the real problem. There is a looming crisis about to roil markets stemming from inflated valuations in the Private Asset sector. This is going to get really messy. Hard Hats on!
Directionless Markets – the biggest threat and an opportunity for instability.
There is nothing as dangerous for markets as directionless markets and a deep threat board. Place your chips accordingly…
Note to Sir Keir Starmer: Clarkson’s Farm and the Hamble Quarry demonstrate how Bureaucracy is killing UK Growth
Labour Leader Keir Starmer has announced growth is a core mission for the next UK government. He should look how Clarkson’s Diddley Squat Farm and the threat to obliterate my village of Hamble with a wholly unnecessary gravel quarry demonstrate how the UK’s local planning and over-regulation stifles growth, hope, and expectations. The process isn’t fit for any purpose. Bureaucrats have anything but the interests of local people in mind. Big money walks all over them.
An outbreak of market common sense? Weighing up uncertainty, growth, recession and why do we believe in conspiracy?
It’s a big week for inflation data, but markets have caught a dose of common sense as the reality of higher for longer interest rates settles in. The question of why the market believes overly frothy narratives is fascinating – understanding why is critical to bet against them.
The New Normal Economy – What Chance of Getting There?
As traders rationalise what Central Bankers say about higher for longer rates, its time to reflect on just why markets and the real economy seem out of line and disconnected. The real issue is about how to reconnect growth and consumption, and that has implications for wages!
Adani – What does it mean for markets? A risk crisis is coming!
The big story in the market has been the humbling of Indian conglomerate Adani. Who could have guessed? But the real issue isn’t that a company may have fooled the market over its value, but that the market never worked out how improbable the valuations were. Time to check up on risk management!
Euphoric Hasty Markets are Mispriced – Steady and Calm – Consider Tesla.
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.
Don’t worry about the UK – I’ve got an idea…
Gosh… The Rest of the World wonders how the UK has suddenly become a corruption-raddled third world kleptocracy. The optics are terrible. Even the Russians are moving out! Fortunately, there may be a solution: let’s be British about it, and show everyone we can do political knavery better than anyone else!
Forget inflation – its interest rates that will set markets and drive new growth.
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!