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.
The outlook for markets remains dire.. no worries! But what chance governments, central banks, the economy and growth enablers suddenly turn up the good news and put it all right again…? Are we over-estimating stagflation and recession?
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.
The World is Utterly Changed. The new imperatives are: Energy and Food Security, Defence and Cybersecurity. Climate Change will become a point of Western Friction. New Geopolitical Lines are being drawn.
Climate Change and Energy Transition is one of the great challenges to capitalism and market economies – but there is no reason to fear it. Its complex, but infinitely solvable. The technologies exist to achieve carbon neutrality by 2050 at a cost far less than doomsters fear.
The media is full of China noise – does the rising tension mean it may become un-investible? The Chinese economy is very different, but recognisably similar. Investment into China boils down to how effectively a capitalist economy can succeed in the face of government diktat, bureaucracy, and intervention – and on that basis it’s a proceed with caution market.
The big event this week is how China celebrates 100 years of it’s Communist Party. What does it mean for markets, and where is China likely to go from here?
There are plenty of positive news stories emerging as the global economy reopens, but also an increasing number of real-world tangible threats emerging. The Pandemic has affected economies from top to bottom, and many issues won’t be resolved overnight. For markets the issues to consider aren’t just inflation or market bubbles, but how supply chain issues and instability could continue to impact sentiment.
Markets are priced for perfection in a very imperfect world. As stocks hit new highs, are the bulls or bears correct? Politics are likely to be the major influence on where we go next, but lurking around the next corner might just be inflation.
Seven factors to understand the market shift that’s roiling markets; bond yields and inflation, distortion, recovery, leverage, tech vs reality, exuberance, and value.
