Equities seem to be in the throes of the death of a thousand cuts at the moment. The rebound towards the end of January, from the initial swoon, was reversed last week, and at this point a new low is all but certain. There are a number of things troubling equities. Geopolitics are a fickle catalyst for anything, but it has certainly added to the misery in the past few weeks. A Russian incursion in Ukraine remains a distinct risk, an event which would force markets to discount the risk of a more sustained military conflict on the European continent, not to mention a further leap in energy prices. The latter would intensify inflation fears, which are already weighing on markets in the context of the surge in bond yields, and the significant repricing in expectations for monetary policy, for both rates and QE. Investors could do with relief from these headwinds, but I doubt they’ll get it, at least not in Q1.
Read MoreI this video I discuss patriotism and nationalism in Europe and in the U.K., using the Brexit referendum as a case study. I open the video by reading an excerpt from a recent article in the Point magazine, in which editor Jon Baskin interviews Princeton professor George Kateb about his writings, ideas and thoughts on patriotism. The views expressed here are mine and mine alone, and as I say in the introduction, I am using Mr. Kateb’s arguments out of context, which is to say, I am using the very specific points he makes to Baskin as an amouche bouche for my discussion. I am not familiar with Mr. Kateb’s writings at large. Though I don’t mention him directly, I have also been inspired by recent comments by Douglas Murray, and conversations between him and other interviewers, relating to the oddness of being ashamed of one's history and heritage. I apologise for the cover of my notebook protruding annoyingly in the bottom of the frame.
Thanks, as always, for watching.
Read MoreOne of the enduring discourses of our time is the idea that something is terribly wrong, with political and cultural life, with the economy, and with nature itself. The message varies, but the main message is the same. The (liberal) world order—as we have come to know it since WW2, and latterly 1989—is coming to an end, a message usually delivered with a ‘good riddance’ attached at the end, for effect. The edifice, we are told, is imploding under the weight of the decadence and complacency of centrists, citizens of nowhere, and globalists, and other similarly-spirited foul. They have dominated for too long, and must now do one thing, and one thing only; repent, and pay, for their sins. The story looks different depending on the perspective from which it is being told, though I reckon it’s possible to identify two broad categories, which have, by now, become clichés in their own right. The left-wing critique tends to home in on two scourges of our time; inequality and climate change. These can be solved by expropriating the wealth of the haves, which will be distributed to the have-nots, and by halting damaging economic activity to protect the planet. The right-wing version is a nationalist protest, rallying in opposition to hitherto staples of global prosperity such as globalisation, international interdependence and multilateralism. The election of Trump and the Brexit referendum in the U.K. are most often trotted out as examples of this movement.
Read MoreIt has been clear for a while that Covid-19 would be a big shock to the global economy, but early predictions of a quick rebound, and a return to normal, now look fanciful. I am now inclined to believe that just about everything will change. My old colleague, and good friend, Jonathan Tepper is musing on a similar note in a recent piece on Unherd.com. I recommend that you go read it; it’s a great piece. For my part, I’ll split my arguments into two observations, not necessarily market-related, but both are key to understand the evolution of markets and the economy in the next few quarters, and I would suggest, beyond as well. We are not even through the first quarter yet, but it’s fair to say that the first chart on my next page already is the chart of the year. It portrays the “optimal” strategy to combat the virus relative to doing nothing, and a policy of loose mitigation. Leaving the Chinese and South Korean outbreaks aside—as well as the grim disaster unfolding in Iran—I think it’s fair to make two overall points. Firstly, there has been a significant debate about the correct strategy to combat the virus. The responses have been scattered on a spectrum ranging from (unconfirmed?) pictures of Chinese authorities welding doors shut to apartment blocks to halt the spread, over to “herd immunity”. Or, as former SAS soldier Ant Middleton’s suggests; “fuck Covid-19”, a statement that he, in fairness, has now retracted.
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