Some of the heat was taken out the escalating China Syndrome yesterday when the Chinese regulator held a “secret” meeting with global firms, while Jay Powell took the pressure out of immediate taper fears. Both issues remain sources of massive future pressure on markets – they are sorted for now, but not resolved!
Will the agreement on global tax ever become a reality, and the real threat of financial asset inflation!
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.
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.”