Many market participants fear the rising quantum of Government Debt spells crisis across the globe. Tush and Nonsense. Debt is not the problem – markets exist to price risk. The crisis lies in economic management, and Political Risk!
Rishi Sunak’s U-Turn on Net Zero is politically expedient, but raises serious long-term questions about the investibility of the UK economy and its place in the world, but… hey, it might just win them some votes (just don’t let your kids know!)
Are global economies heading for a soft or crash landing? Why the Republicans seeking to impeach President Biden have just played a brilliant short-term political hand, and what the ARM IPO tells us about gullibility in bubble times.
Markets are at an inflection point: bonds are more attractive, but credit risks rise in a deflationary bust? Or should higher oil prices remind us what triggered inflation, and raise the risk of consequential Stagflation!
While the US is on holiday, its maybe time to consider the biggest threat to market-political stability in 2024 – the US electoral cycle. It’s a pretty binary – Trump or anyone else. At present Biden is setting up to lose – anyone else would likely win.
Fitch threw a spanner into the works last night downgrading the US – but they were right to do so. Political risks in the US and UK – both are approaching peak electoral cycle crises points – are rising and the disinformation wars will ensure it gets… fruity.
Everyone seems worried about the sustainability of Sovereign Bonds in terms of rising rates, interest burdens, debt quantum, and who will keep buying. Relax. Bonds have weathered worse. But there are ways to use Sovereign debt better.
Dangerous times ahead as politicians weigh up the pros of sacrificing long-term climate and environmental goals for short-term electoral gains.
Markets have been far more positive than expected in 2023 – thus far. There is still much uncertainty out there, but what is the market missing? I have two particular under-played threats to watch – corporate debt and social unrest.
The Thames Water debacle is shaping up to be a critical “Judder” moment for the UK. Public utility privatisations decades ago have left a legacy of underinvestment and broken services. The bills will be enormous – and crippling - creating a potential investment crisis.
