The European Central Bank (ECB) raised its inflation target last week, at the same time going to great lengths to try to persuade people that it did not.
In the process, the central bank also stated that it will find a way to deal with an issue that is increasingly pressing: that of runaway house price inflation.
Continue readingBy Mirela Roman
This “like-no-other” Covid-19 pandemic is clearly a dangerously unique event, with ongoing severe economic and social consequences all around the globe. Nassim Taleb has famously described the Black Swan and more recently, BIS researchers pointed to the Green Swan in reference to the impact of climate change.
But the Covid-19 Swan is quite a combination of colours. It is an ongoing emergency situation, with fear often overcoming hope while anxiety heightens amid a decline in living standards.
If this is not yet capitulation, it sure feels like it. Money has been fleeing stock markets at record speed, and despite dovish signals from the Federal Reserve, investors are still not taking advantage of the buying opportunities the panic in the markets are throwing at them.
What a spectacular lesson the first half of the year delivered for investors. At the beginning of the year, it looked like the UK’s vote to leave the European Union was a great idea: the eurozone seemed on the brink of disintegration.
This is going to be a crucial year for the European Union. There are more and more voices predicting its disintegration. With the political events that are ahead, it’s not a possibility that should be taken lightly.
Stock markets swooned again last Friday, when the US jobs report showed the number of jobs created in January was well below expectations, at 151,000 compared with the 190,000 forecast by analysts.
Investors can no longer find comfort in turning bad news into good news, as they once did because any piece of bad economic news meant the Federal Reserve held interest rates rather than hike them.
With the recent stock market collapse and bear market, the critics of capitalism are out in force again; shouts that capitalism is dead or that capitalism is what caused this mess are growing louder.
There are few things that are less certain right now than the path of interest rates in the UK. That’s despite the Bank of England’s attempts to reassure investors that it will not raise its key interest rate anytime soon from the record low level of 0.5%. Even when it does, it will do so in a gradual manner, the central bank says.
If you’re curious to see where the seeds of the next financial crisis are in Europe, take a look at what’s happening in the real estate sector.
If you’re going on holiday to Europe and haven’t yet bought any euros, maybe you should hurry. Unless Greece really exits the eurozone (and that can still happen), the pound’s advance versus the euro seems limited from here on.