The Gods of Chaos have brought together an alliance to bring down the West. If its not the weather, it will be Russia, Gas prices, the Middle East and Oil, or maybe the prime global commodity – Chips – is the next thing they will target. I'm staying long Gold.
Everyone seems worried about the sustainability of Sovereign Bonds in terms of rising rates, interest burdens, debt quantum, and who will keep buying. Relax. Bonds have weathered worse. But there are ways to use Sovereign debt better.
SVB is done and dusted, and its time to ask questions, like: what is the future for banks? What do they do, and how do they do it? Are they at an evolutionary dead end? Probably. And the sheer joy that is the UK budget… stronger coffee please.
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.
The G7 agreement is being hailed as a great step forward, but will it ever happen? Janet Yellen’s call for higher rates is a clear sign the problem of financial asset inflation will finally be addressed – the question is how painful the treatment and taper tantrum will be? Not addressing financial asset inflation is a far bigger risk than the debt crisis many monetary traditionalists perceive has grown from government pandemic spending.
The successful mass pushback on the European Super League may seem a minor issue contained in the sports arena, but it highlights growing voter dissatisfaction with politics, wealth inequality, questions who will pay for funding recovery, and just how much longer the speculative bubbles can continue as the world changes.
No surprises from Fed-Head Jay Powell yesterday – no matter how much we fear inflation or recovery pushing rates higher, he reassured us by saying what the market wanted to hear: the US economy remains “a long way from our employment and inflation goals, it is likely to take some time for substantial progress to be achieved.”
