April 2022 will go down in market history as the month it all became obvious.. But what? That the global economy is in need of repair, markets are overly euphoric and consumers can’t consume when they are broke.
As the West reopens, China’s lockdowns remain draconian. It has eased rates on the back of growth concerns. The result is growing monetary divergence, and China looks set to go down the same monetary experimentation route the West is now trying to reverse.
Markets and data have been posting strong numbers, but all around are warnings on future outlook problems. Politicians are keen to claim victory over the pandemic, but the science increasingly points to Covid becoming a very long-lived problem and long-term threat to global activity
Everyone loves a conspiracy theory, but what if the stories Covid escaped from a China virus lab take hold? We will never know the truth, but as the rumours multiply, they could trigger renewed trade-war. It could unravel China’s regional hegemony and trigger a dramatic reversal for the global economy -especially for China.
Markets are digesting what’s been a fascinating week in terms of swings, tensions and threats. Everything from Supply Chains, Taper and Inflation is on the radar as speculative assets swing widely. Maybe it’s time to sit back, step away and take time to consider the macro issues of recovery, and the micro issues about how the pandemic has altered behaviours. The UK’s bounce bank loans could highlight how the world has changed as massive defaults are expected. Meanwhile, the AA goes straight to the top of my list of firms that should be wiped from the face of the Earth…