SVB is a crisis averted, but the market wasn’t paying close attention which spells opportunity. There are bigger risks from central banks being distracted from fighting inflation and normalising rates. That’s the real crisis!
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.
It’s a big week for inflation data, but markets have caught a dose of common sense as the reality of higher for longer interest rates settles in. The question of why the market believes overly frothy narratives is fascinating – understanding why is critical to bet against them.
As traders rationalise what Central Bankers say about higher for longer rates, its time to reflect on just why markets and the real economy seem out of line and disconnected. The real issue is about how to reconnect growth and consumption, and that has implications for wages!
Gold – can’t eat it, can’t use it, but its everything crypto never was: tangible, exchangeable, a store of value, and a kitty for when things get tough. In uncertain markets…. Don’t forget the yellow stuff.
What is the Fed really thinking? They will probably er on the side of lower rates to avoid recession, running the risk of entrenched wage growth. Soft landings are the stuff of myth! How it effects the global economy is critical.
Something different this morning – is the inflation threat really about to be corked back in its bottle? My head of research, Ernst Knacke thinks so.. so this morning I’m letting him argue the point on where inflation is headed and how to position for lower inflation next year!
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.
As we approach US Thanksgiving – the start of holiday markets, the markets seem convinced we’re back on an upward path, but the reality is the new economic and inflationary cycle may only just have begun..
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.