Political instability is turning into a global competition as Bolsonaro supporters storm Brazil’s Government, the CCP reopen China’s Borders to chaos, and the US Speaker deals with political hi-jackers to secure his seat. All will have consequences and should make markets nervous.
After some tumultuous weeks in global markets, where do we go from here in terms of the dollar, inflation, energy, China? It’s all terribly complex, but probably good news for some and bad for others. The UK is likely on the loser list.
The US has been a great Anglo-Saxon creation and experiment, but the way in which 6 conservatives hold the reins of power, and are showing they are prepared to flex them is causing rising doubt.
Markets and Geopolitics intersect in the Great Game being played in Ukraine. The West’s economies are diverging as a result of inflation shocks and looming recession. Divergence will play into Russian’s hands, and presents a clear market strategy: Buy Dollars and Sell Europe.
China’s markets are under pressure from the widening Chinese Communist Party’s regulatory crackdown – which is likely as much about imposing party discipline and control as much as it was ever about consumer protection. But as investors fret about crashing China stocks, rising global uncertainty and the destabilisation caused by the Afghan debacle, the Chinese are likely to up the pressure and further test a distracted US administration. “Interesting times” lie ahead for global markets as the tension threatens to escalate.
Across the Occidental Economy there seems a trend towards political failure as polarization, sleaze and opportunism takes hold, even as electorates suffer from increasing inequality and declining prospects. As the threat of post-pandemic inflation rises, the ingredients are all there for further instability and labour strife. It’s all happening as the geo-political spheres of influence between China and the West are being redrawn.
