Inflation is increasing the burden of the UK’s debt, but it’s been well managed and should not impact as heavily as it might in other highly indebted nations. We can probably afford to spend more – especially in Defence, the primary duty of any state.
As we start a new week of dismal markets, depressing political news, rising inflation and lots of what next worries… relax.. the Sun will come up tomorrow. Not so sure about the economy though…
The Fed just aggressively hiked 75 bp in the midst of the first major correction since 2009, making clear the game has changed, and we’re into a whole new cycle. While the market correction remains ongoing, when it flips, it will flip swiftly. Already there are positive signals to be seen – but only if you look outside the box.
After the brutal lessons of April, May will set the tone for a new market – lots of threats, but full of opportunity.
April 2022 will go down in market history as the month it all became obvious.. But what? That the global economy is in need of repair, markets are overly euphoric and consumers can’t consume when they are broke.
The Ukraine War has catalysed a tsunami of negative economic events around the global economy – and markets are remaining pretty much blind to the long-term consequences.
Who really knows what is happening in Ukraine, or what the players are thinking? The long-term economic consequences could be huge, marking the moment the post Cold-War global consensus and order breaks down. The potential consequences include social and political instability, war, famine, and who knows what else.
The World has changed and changed utterly – although we may not realise it yet. We are likely on course for massive disruption, inflation, rising geopolitical crisis and uncertainty, and a high probability of stagflation. But – don’t tell anyone.
Anyone for a choc-ice?
The immediate financial market outlook is risk-off driven by Ukraine, followed by rising fears and concerns about inflation policy mistakes, wondering when to pick the bottom in the tech cycle to buy great ideas, why Boeing should be in jail, and longer-term concerns about where we are going in terms of transition.
Markets are great at reacting to a single stimulus but are like a frog in a pan of warming water when it comes to consequential events. Forget “Black Swans” or “no-see-ums”, but figure out how the increasingly complex picture of unfolding events and consequences are driving markets!
