The Market Commentariat think deflation will counter inflation, rates will fall, and recession will be limited. The world is more complex - supply side factors are more volatile. Stagflation is a more likely outcome than recession.
As Janet Yellen warns of default risk, and Jay Powell hikes rates, the risks to the global economy are mounting: a deflationary bust, or stagflation? Market confidence in the face of a deepening credit crunch is falling.
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 outlook for the UK looks increasingly grim. There are few reasons to hope a new government can reverse the mounting consumer fears, stagflation and the growing sense of decline.
Winter is coming as soaring gas prices are set to bite across Europe. Putin’s energy insecurity strategy has proved his major success and could yet win him the Ukraine War. Stagflation is nailed on it Europe.
The West will win the economic war against Russia, but it will take time and impose recessionary costs, while triggering pain across markets (including the housing bubble). But when it’s done… it will time to put your buying boots on!
Fraxious markets as stocks wobble, fears rise, energy prices spike; what’s to worry about? Preparing for inflation would be one thing – but being ready for opportunity is another!
The risks of Central Bank policy mistakes are escalating. Fixed Income markets are wising up to the potential of long-term stagflation/inflation. A bond correction will crush stock markets if/when real interest rates turn positive. Central Bankers will need to decide: intervene to save markets – continuing the current distortions, or let loose the dogs of market meltdown. Anyone for the last few choc-ices?
The most destructive rock falls start with a single pebble trigging a cascading chain reaction. Are markets heading towards a cascading crash as spiking energy costs join inflation and supply chains on the list of likely meltdown trigger points? Or should we relax?
The market is worrying about the potential of an October crash, but what might trigger it? Two suspects: a resurgent Coronavirus and/or a global supply chain cardiac triggering stagflation?
And top tip from my father: teach your kids to Ski, Sail and play Tennis!