Central banks squandered their chance to keep inflation under control, and it is not sure that their game of catch-up will work.
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Financial markets turn from servant to master for the UK
Ever since the Brexit vote, financial markets have had an uneasy relationship with the UK. The pound fell sharply after the vote to leave the European Union in June 2016, which surprised many in the City, and since then, UK financial markets have been volatile, trying to price in the consequences of this decision.
Continue readingWhy I hope Liz Truss is lying
Liz Truss, the favourite in the race to succeed Boris Johnson as prime minister, has laid the blame for inflation at the door of the Bank of England, saying it must do more to fight price rises.
Truss also said she would change the Bank of England’s mandate if she becomes prime minister, to ensure that the central bank fights inflation more efficiently, but gave no details about what that change would entail.
With consumer price inflation hitting a 40-year high of 9.4% in June, you may think she has a point. The Bank of England is behind the curve, but when it comes to changing the central bank’s mandate, I really hope Liz Truss is lying. If she is not, then we should all be very afraid.
Continue readingThree reasons why market capitulation may be over
The return of inflation has taken a lot of people by surprise, although it should not have done. Worryingly, even central banks have acted quite surprised by the abrupt rise in prices, when they should have expected it.
Continue readingBuy in May and go away?
It looks like the old saying “Sell in May and go away” has just been turned on its head. After cratering for seven weeks, the S&P 500 index ended last week up 6.6%
Continue readingWatch commercial banks’ interest rates for clues on the future
While all eyes are on what central banks will do with interest rates, consumers and investors alike should really worry about what commercial banks will do.
Continue readingBeware value traps when hunting for stock market bargains
European stock markets recouped all the ground lost since the February 24 Russian invasion of Ukraine, but investor optimism may be misplaced.
Continue readingBank of England ignores the elephant in the room: Brexit
The Bank of England has ignored inflation for so long that is now clearly behind the curve, and getting more and more desperate to catch up.
But the central bank is in danger of scuppering its own purpose by ignoring another big change to the economy: Brexit.
Continue readingFour reasons why the stockmarket rally is not over
Those who worry that the extraordinary stock market rally will come to an end in 2022 may be worrying too soon: equities could still power ahead, and particularly so in Europe.
Continue readingThree potentially positive effects of inflation
Inflation is here to stay, rather than transitory, no matter what central banks are telling us. But rising inflation could help make the global economy more efficient. Here are three potentially positive consequences of high inflation:
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