There are lessons from the public humiliation of Kwasi Kwarteng for governments and corporates around the globe. If we are going to address the looming economic crises – then governments, central banks and financial instutions need to be on the same page.
The UK confidence crisis is not over yet. Chancellor Kwasi Kwarteng is saying nothing, hoping for stability. The Bank of England finds itself providing top cover by its willingness to hike rates. The Treasury Select Committee should be asking what advice the OBR, Treasury, The Bank of England and the Gilts Office gave Kwarteng.
Global Markets have nosedived – the UK’s confidence crisis is one trigger alongside rising recession risks, crashing consumer spending and host of indications we ain’t near done on higher interest rates as inflation becomes embedded into economies and dollar strength continues unabated.
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?
The UK is at risk of breaking its “Virtuous Sovereign Trinity” of stable politics, currency and bond markets. Collapsing confidence in politics to stem the slide in sterling and thus Gilts, could see the UK stumble into a crippling Sovereign Financial crisis sooner than we think possible.
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.
Inflation will dominate the headlines while the US earnings season kicks off. The prospects for stocks on the back of falling numbers and crashing consumer sentiment bode ill for recovery, and strongly suggest there is further market downside to come in Q3.
The number of threats facing markets; from inflation, central bank hikes, war, geopolitics, recession risks, corporate earnings and bond liquidity are legion. The big risk is they combine into a chaotic tipping point, at which moment we will just have to pick up the pieces…. Again.
Did you feel the Earth shake and judder? When dull, boring, predictable retail giants crash 25% intra-day, time to take notice. Boom/Bust is back – and this time its serious. Anyone for the last few choc-ice?
Markets look distinctly soft, and vulnerable to further downside pressure. The gaps between value, hype and narrative are becoming clearer – spelling opportunity, but also raising the risk of a crash.
