As we start a new week of dismal markets, depressing political news, rising inflation and lots of what next worries… relax.. the Sun will come up tomorrow. Not so sure about the economy though…
The outlook for markets remains dire.. no worries! But what chance governments, central banks, the economy and growth enablers suddenly turn up the good news and put it all right again…? Are we over-estimating stagflation and recession?
Central Banks and Politics will be the dominant theme this week/month/year. Politicians are anxious to show inflation and recession are not their fault. Blame Central Banks! The Politics of Blame has profound consequences for markets.
Macron’s victory has been hailed as a market plus, a win for Europe and common purpose, but it’s likely just a crisis averted, perhaps, for a few more years. Around the globe populism will likely be fanned by inflation, food and energy insecurity and become an increasingly destabilising force on markets.
Persimmon, the UK home builder, demonstrates just about every single possible corporate failing; bad governance, greed, social and environmental contempt, and protects itself with purchased politicians. Time it was disciplined by the market.
Just how vulnerable are markets to an escalating distrust of politics, the death of democracy, populism, and authoritarianism, and how much of it is due to deliberate manipulation by bad actors and fake news? Uncertain in uncertain markets isn’t helping.
Markets are great at reacting to a single stimulus but are like a frog in a pan of warming water when it comes to consequential events. Forget “Black Swans” or “no-see-ums”, but figure out how the increasingly complex picture of unfolding events and consequences are driving markets!
Boris apologised – but is it too late? Resolving the innumerable crises facing the UK requires political focus, and less of the politically expedient indignation being displayed in parliament. It won’t make anything better, threatens further destabilisation, and diminish the UK’s global competitiveness..
Short porridge this morning as I’m angry and in a rush. As the UK government flounders in yet another storm of sleaze and corruption accusations, its venality and crass opportunism appears to be spreading through the economy, and is likely to hold back the recovery of personal and business travel.
As markets shake off their summer slumbers, what should we be worrying about? Lots..! From real vs transitory inflation arguments, the long-term economic consequences of Covid, the future for Central Banking unable to unravel its Gordian knot of monetary experimentation, and the prospects for rising political instability in the US and Europe.