The UK is going through periodic angst as everything looks terrible and we wonder how to balance the budget, pay the bills and avoid penury. Relax. We worry too much. Everyone else is cooking their national accounts. The UK can do it better. Buying Boots at the Ready!
The extraordinary number of new unicorn companies isn’t necessarily a sign of booming corporate prospects and innovation. It’s as likely due to too much cheap money chasing the market, deliberate hype and deluding the masses as to their value.
The great Autumnal Bond Funding Season is upon us, but the looming taper of Central Bank Asset Purchase Schemes could well expose just how broken and dysfunctional bond markets have become. Markets always over-react to stress and panics, but when markets struggle with price discovery and liquidity the coming sell off could be magnified, which means a great buying opportunity in bonds may be coming!
ESG is a marvellous concept appallingly executed. To understand how it’s gone wrong I recommend Tariq Fancy’s rant about his time as Sustainability CIO at Blackrock. To figure out how we actually deliver climate-change mitigation, social amelioration and better corporate governance, and avoid these lofty concepts being hijacked and suborned by business and finance interests, we need to replace the carrot of ESG with the stick of Carbon Taxes and Corporate Legislation. Time to get real and dispense with ESG claptrap.
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.
Elon Musk’s robot left us all giggling over the weekend, but may just prove to be the stunt that breaks Tesla. The suspension of disbelief that’s fuelled unicorn tech valuations in the face of reality these past many years feels like its breaking-down as reality bites.
China’s markets are under pressure from the widening Chinese Communist Party’s regulatory crackdown – which is likely as much about imposing party discipline and control as much as it was ever about consumer protection. But as investors fret about crashing China stocks, rising global uncertainty and the destabilisation caused by the Afghan debacle, the Chinese are likely to up the pressure and further test a distracted US administration. “Interesting times” lie ahead for global markets as the tension threatens to escalate.
Fed Minutes hint at Taper this year, but markets are pricing for it not happening: a slowing global economy, competitive pressures, the market’s addiction to debt and Covid will all conspire to stop Central Banks tightening. They might be right.
