Bond Markets are a wonderful thing to behold in full rally mode, but expectations of a swift return to lower rates depend on Central Banks playing ball, and nothing else changing. Experience shows things change quickly re inflation, rates and markets!
Is inflation dead or just resting? Are rates likely to remain higher for longer, or are we poised on the edge of a bond bull market? Everyone is watching energy and tensions around the Middle East. I suggest we worry about wages as well.
Don’t assume inflation is licked, don’t assume interest rates will stop rising, don’t assume there aren’t further bank failures to come, don’t assume politics and society will cope well, but don’t assume it’s all end of the world. In periods of financial uncertainty there is opportunity…
esterday’s US CPI numbers look good at a glance, but the reality is the Western economies may face ongoing sticky inflation and long-term stagflation while reversing the economic damage of a decade plus of monetary experimentation. That requires new investment approaches.
The Media love financial crisis – it sells. The reality is the need to understand, plan, prepare, and don’t expect anything you expected to happen, happen. Enjoy. Sun comes up tomorrow.
The Fed tries to be dovish to calm market fears, but banking fears and inflationary threats on the economy may lead us somewhere new: A Stagflationary Bust!
Swift Action by the Fed and around the globe has averted a major tech catastrophe, but the Silicon Valley Bank debacle highlights failure and further crisis to come. Hard Hats Stay On!
Inflation across the West looks to be more entrenched than markets believed – Higher for Longer. Maybe it’s time to accept it’s going to take time to fix, and look elsewhere for returns.
Delighted to hand this morning’s Porridge to my colleague Julian Wheeler, who reminds us not to fight the Fed, making the argument against deep recession and for stock market upside. Markets are about differing views and perspectives – and despite my latent bearishness, I find myself in agreement with much of what Julian says.
Jerome Powell signalled a slow-down in interest rate hikes – and markets loved it. But did he just make a long-term mistake by not decisively signalling the end of the era of monetary and market distortion? There are lessons to be learnt, not least being the role of inflation in a buoyant economy.