As London grieves we’re not paying much attention to politics and markets – but we should. The outlook is deteriorating. Confidence is declining and will likely get worse if the new government’s lack of awareness and sensitivity continues.
The UK is at risk of breaking its “Virtuous Sovereign Trinity” of stable politics, currency and bond markets. Collapsing confidence in politics to stem the slide in sterling and thus Gilts, could see the UK stumble into a crippling Sovereign Financial crisis sooner than we think possible.
The pace of US CPI inflation moderated slightly, but it’s too early for the market to conclude rate hikes are over. There are many imbalances still to resolve – especially in consumer credit. Meanwhile, the new UK premier’s clumsy attempts to blame the BOE raise questions.
Chips are a critical component of global supply chains – there are significant geopolitical risks inherent in the concentration of semi-conductor production in Taiwan. However, an even bigger geopolitical risk may have been triggered by the FBI raiding Trump’s lair in Mar-a-Lago.
Politics matter in markets – and despite a new Premier, the UK will likely remain far from fixed and a long way from political stablity. The problem is finding a pragmatic approach to Brexit.
The tragedy of Boris Johnson continues. The question is not why did they leave, but why have others remained in the bunker with him. Just what has Boris promised the new Chancellor, and does what is good for Boris coincide with what is good for the UK?
The US has been a great Anglo-Saxon creation and experiment, but the way in which 6 conservatives hold the reins of power, and are showing they are prepared to flex them is causing rising doubt.
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.