Tag Growth

Forget inflation – its interest rates that will set markets and drive new growth.

Around the globe everyone thinks inflation is beaten. It may well be, but the consequences will persist. Interest rates may not “pivot” the way market optimists hope, with profound implications for equities and bonds. We are into a new market cycle of normalised rates and corporate fundamentals. All-in-all, that’s a good thing for growth!

Did the Fed just make a long term mistake? Is inflation a bad or good thing?

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.

Halloween, and a scary market outlook indeed – but not nearly as bad as you may fear!

Halloween is a great time to be scared about markets. They are inconsistent,  confused and uncertain, but the reality is even rising interest rates, inflation and trade wars sort themselves out - eventually. The real danger is how much worse bad politics and make a scary situation absolutely frightful.

Germany is just a distraction from the real story

Who cares who replaces Angela Merkel? But the likely inability of the ECB to address the consequences of monetary experimentation and inflation in coming years could cause Germany’s coming generation of bland political nobodies to be superseded by something more populist and chaotic, creating all kinds of problems for Yoorp.

Worry About the Real Stuff

There are plenty of positive news stories emerging as the global economy reopens, but also an increasing number of real-world tangible threats emerging. The Pandemic has affected economies from top to bottom, and many issues won’t be resolved overnight. For markets the issues to consider aren’t just inflation or market bubbles, but how supply chain issues and instability could continue to impact sentiment.

Markets Rally, but what about COVID?

Markets look set to rally strongly into Q2, but are they over-exuberant? The rise in deaths and new strains in Brazil hints the Covid war isn’t won yet, there are rising political risks in Europe, and widening wealth inequality is apparent everywhere. Just how solid are our expectations of stability, renewed global travel and recovery if Covid is here for the long-term?