Besides the immense human tragedy that it has caused, Russia’s brutal attack on Ukraine has also thrown emerging markets back at least a decade in terms of attractivity for investors. It will be hard, if not impossible, for the asset class to bounce back.
Continue readingTag Archives: interest rates
Watch 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 readingBank of England doubles down on house price inflation
This may not be the main thing that financial markets are looking at right now, but the Bank of England has announced it is thinking of removing another hurdle from the path or house price inflation.
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 readingHousing wealth soars while productivity lags
A century ago, the roaring ’20s were a time of hedonistic excess. After the horror of World War I, people wanted to rebuild, but also to forget. Wealth increased, and so did prices.
While we like to think we are smarter, or at least more knowledgeable than 100 years ago, there are worrying similarities between the two periods. If anything, the excesses this time around are much greater.
Continue readingWhy the ECB is in no hurry to fight inflation
The euro has lost a lot of ground versus other major currencies as the European Central Bank (ECB) is taking a very dovish stance even compared to the usually dovish Bank of England.
As expected, a German has the difficult task of being a lone hawk amid doves: Isabel Schnabel, member of the ECB’s Governing Board, recently warned that the central bank has consistently been wrong in its inflation forecasts.
Continue readingWhy inflation does not bother Boris Johnson too much
After Brexit, the UK seems to be jumping randomly from one crisis to the next, and the government seems strangely unperturbed by the general distress.
Partly, this can be attributed to the politicians’ own failure to learn. Prime Minister Boris Johnson has proven again and again that he is prone to repeating past mistakes — the way he handled the multiple lockdowns in the Covid-19 crisis is the best example of this.
But what if at least part of it is deliberate? There could be a couple of reasons for which crises suit Johnson and his government very well, at least for a while.
Continue readingConsumer price inflation or house price inflation? UK has to choose
The perfect storm is brewing for UK inflation. Boris Johnson and his government will not admit it, but their choice of a hard Brexit will exacerbate price rises, on top of the effects of the Covid-19 pandemic.
This could put the Bank of England in the unenviable position of having to choose which bubble to burst: consumer prices, or house prices.
Continue readingECB pays lip service to worries about inflating a housing bubble
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 readingInvestors fear inflation but run to it
Recent capital flows highlight a paradox: investors are afraid of inflation, but seem to have increased their allocation to just the assets that would do worst out of it.
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