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..
Halloween is a great time to be scared about markets. They are inconsistent, confused and uncertain, but the reality is even rising interest rates, inflation and trade wars sort themselves out - eventually. The real danger is how much worse bad politics and make a scary situation absolutely frightful.
There is nothing like a dead cat bounce to cheer up the already doomed, but the real issues are inflation and dollar strength. Both can be addressed, and the treatment will hurt. Smile and get used to it.
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!
Central banks, inflation and recession are the visible risks, but what if we are looking at all the wrong things?
Everyone is balancing inflation, economic numbers and this week’s Jackson Hole Central Bank smooze-a-thon to guess markets. What if we are looking at the wrong things – and economic divergence, income and wealth inequality and unravelling domestic politics are the critical factors?
The pace of US CPI inflation moderated slightly, but it’s too early for the market to conclude rate hikes are over. There are many imbalances still to resolve – especially in consumer credit. Meanwhile, the new UK premier’s clumsy attempts to blame the BOE raise questions.
So many contradictions abound in current markets, but it’s possible to cut through the noise to discern some probable direction. The old adage of being confident while others are fearful looks one way to approach the current confusion.
There are lots of outlooks and scenarios on the inflation threat: what if its longer and turns stagflationary, and just how much more destabilising would the fraxious global economy become?
In bonds there is truth: Apple’s Jumbo $5.5 bln corporate bond deal hints of a firmer market to come. A clear divide between US Recovery and European Slowdown is increasingly apparent – a weaker Euro will further add to European problems.