Markets love drama… from the next corupto-coin exchange to collapse, rising interest rate threats, and riots in China in the face of a Covid meltdown. But drama and reality seldom coincide – events are more prosaic!
Last week saw a succession of fundamental shifts in how the global economy is working: inflation, China’s reopening, western politics, crypto, Climate Change, Tech stocks, and in Ukraine. These all have significant potential market implications.
The Fed roiled markets over the pace and scale of rate hikes, but ultimately markets are about growth. The big issues were not thinking about enough are global recession, slowing trade, and the threats China’s evolution into a Surveillance State raise for future growth.
When the fact change, change strategy. The enthronement of Xi Jinping represents such a moment – and comfirms the big theme for coming decades: The Middle Kingdom vs the West.
Blain’s Morning Porridge – July 13th 2022: How long and deep is Inflation, and how close is China to a…
The world is watching for signs confirming global recession, so naturally markets have rallied (!). Political instability is resolved to be replaced with some bleak truths and spending choices. So.. steady at the wheel, nothing to worry about then?
Markets look distinctly soft, and vulnerable to further downside pressure. The gaps between value, hype and narrative are becoming clearer – spelling opportunity, but also raising the risk of a crash.
Calls to break up HSBC to realise the value of its Asian franchise are a critical moment for the bank as it pays the costs of being too big, too bureaucratic and for the inability of management to spot its critical weakness…..
Ultimately the economic history books will record Russia’s invasion of Ukraine as a speedbump, and perhaps a triumph for a United Europe. The consequences of an Economic War with China could be much, much more significant!
Evergrande’s imminent default is rocking markets – but few believe the collapse of a Chinese property developer could trigger a global financial crisis. What if Evergrande is just a symptom of a deeper malaise within the Chinese economy and its political/business structures? Maybe there is more at stake than we realise? What if Emperor Xi decides he needs a distraction?