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.
AI has become the markets new, new thang/bubble as investors pile into the new, new narrative forgetting the fundamental rules of investment are about generating dull, boring, predictable returns which look frothy in hot stocks, negative yields in bonds, thus positive returns from real assets stand out!
Markets wobbled yesterday on the current litany of fear: interest rates, inflation and Ukraine. The bigger issues are just how unsustainable current equity valuations remain, and where to invest in range-bound markets.
Consumption and a cost-of-living crisis are upon us, but markets blithely assume it’s all upside to 2023. The risk is not a massive crash, but growing realisation the global economy has peaked, needs a period of normalisation and a reset after the madness of the last decade.
US Mid-Terms will dominate the news this week. Gridlocked US politics might be good in terms of zero legislative surprises, but polarisation will punish stocks and diminish the US over the long-term.
Not an insightful Porridge this morning, but let me tell you a story about lessons learnt on holiday and what’s likely to dominate the news flow in August ahead of the September market!
Market expectations are all over the place as participants factor in what a new Fed appointment might mean in terms of lower for longer rates and more accommodative policy – but it all feels increasingly hollow. Momentum is not infinite!
There is general sense “something wicked this way comes” towards current priced for perfection markets, but trying to define the exact N0-see-um likely to trigger a market correction or meltdown is a notoriously pointless game. However, there are plenty of ways to prepare for whatever comes next….
What is going on in Europe? The political and economic options are limited, the outcomes predictable, and none of them are good. But don’t worry - Europe can always blame the UK and AstraZeneca.
It’s not what you know about value – it’s what the market believes that matters when it comes to price. Will Call My Agent win the streaming wars? And will widespread adoption fuel a massive boom in Socks… just the shills say has happened in Bitcoin?
