The UK’s finances depend on how long energy security remains compromised, and whether the new Truss government can convince markets to fund that time.
The news looks bleak. A cataclysm of gloom is set to sink Europe and the UK – but, maybe things aren’t as bad as we think. Good news and a realisation things can get better could stabilize sentiment, and build a recovery base. Maybe?
Readers of a sensitive nature may wish to take a chill pill before reading this morning’s Porridge comment. Remember, the sun will come up tomorrow. The market might not.
As summer wends towards its end, a winter of populist discontent from left and right will make Europe increasingly fraxious. While the US economy will likely be on path to recovery – Europe will still be trending down.
Putin’s supposed cleverness haunts markets. How much harder will he squeeze Europe’s energy crisis? How will Russia change the geo-political order? Will Italy’s coming election be the crisis that breaks the Euro? We give Russia too much credit – it’s a weak nation that can only get weaker.
Winter is coming as soaring gas prices are set to bite across Europe. Putin’s energy insecurity strategy has proved his major success and could yet win him the Ukraine War. Stagflation is nailed on it Europe.
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.
Lots of comment about imminent crisis in the ECB and European Bond Spreads. Relax. It’s a difficult circle to square, but the politics mean its more likely solutions will be found, and its buy Italy, Spain and Greece on the dips!
Markets and Geopolitics intersect in the Great Game being played in Ukraine. The West’s economies are diverging as a result of inflation shocks and looming recession. Divergence will play into Russian’s hands, and presents a clear market strategy: Buy Dollars and Sell Europe.
The ECB is panicking. Time to buy Italy?