Inflation across the West looks to be more entrenched than markets believed – Higher for Longer. Maybe it’s time to accept it’s going to take time to fix, and look elsewhere for returns.

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!

Consumption and a cost-of-living crisis are upon us, but markets blithely assume it’s all upside to 2023. The risk is not a massive crash, but growing realisation the global economy has peaked, needs a period of normalisation and a reset after the madness of the last decade.

Something different this morning – is the inflation threat really about to be corked back in its bottle? My head of research, Ernst Knacke thinks so.. so this morning I’m letting him argue the point on where inflation is headed and how to position for lower inflation next year!

As we approach US Thanksgiving – the start of holiday markets, the markets seem convinced we’re back on an upward path, but the reality is the new economic and inflationary cycle may only just have begun..

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?

Pretty bleak headlines this morning –  sentiment is crashing. Excellent! In crisis there is opportunity. Where and what are they? For clues, look to how the authorities can address the looming crisis!

Two simple questions for Central Banks; what was their plan, and what is it now? The consequences of 14 years of monetary experimentation are upon us. From Macro to Micro, Boeing is a sad illustration of the consequences of central bank policy.

Markets are being whipsawed by rate hike threats from Central Banks, China lockdowns, the Ukraine war, while being stalked by inflation and stagflation. The big risk remains policy mistakes – trying to solve these with the wrong monetary and fiscal policies.

Occasionally the Morning Porridge strikes a lucky insight on markets – this morning here are some thoughts on how 2022 markets and events may or may not develop. If they occur I shall hail myself an investment genius. If not, can we quietly forget them?