The World has changed and changed utterly – although we may not realise it yet. We are likely on course for massive disruption, inflation, rising geopolitical crisis and uncertainty, and a high probability of stagflation. But – don’t tell anyone.
Anyone for a choc-ice?
Inflation should be front and centre for markets – give or take Ukraine, Oil, etc. How real is it, and just how bad could the consequences be? Not talking about it is one way to ensure it hurts.
It’s going to be a testing week for markets as a whole slew of negatives, challenges and no-see-ums threaten to overturn everything. It couldn’t look worse… unless of course you remember my key market mantra (read on), and that the sun usually comes up tomorrow. Happy Valentines..
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?
Inflation is the market’s theme today. Markets expect it, but are they prepared? Inflation doesn’t necessarily spell disaster, but it will force change in the way we think about markets – and Tech will likely be the sector that feels it most!
Markets are welcoming victory versus COVID, but the next crisis is upon us: Energy instability. The consequences could be dramatic..
Let me present a list of things to worry about next year. Inflation, US and China growth, Stagflation, Central Banks, Stocks, Climate and Equality, etc, etc.. But the big risks will be the consequences of US Politics and a Liquidity Meltdown in the Credit Markets.
Forget everything you think you know about inflation. It is not solely a consequence of “monetary phenomena”, but largely about the behaviour of crowds. That’s why it’s so dangerous to growth and markets.
Jay Powell keeps his job and faces the inflation quandary – hiking rates too soon risks recovery, but inflation needs addressed. The likelihood is lower rates for longer – which will juice euphoric markets further. What’s the alternative? Stop buying financial assets and buy the real economy!
Despite Global uncertainty, rising inflation, and potential slowdown, markets remain Euphoric. All irrational markets eventually pop. How much longer can the current market mood be sustained? Longer than we think…
