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Events Dear Boy – Monday Musings 17/05/2021
When Harold Macmillan was asked what the biggest problem politicians faced, he allegedly said “events dear boy events”. I used this quote some while ago when talking about a different set of issues and do so again today when comparing the situations of the leaders of our two main political parties. Blondie must deal with the new variation of the Covid Virus and the Lawyer with the resurgence of the left wing of the party. Clearly in the short-term Blondie has the bigger problem but if the Lawyer cannot deal with his problem, it may leave Blondie and his gang in charge for many years which cannot be good for our democracy. I say this as a conservative voter but mainly as someone who believes that we are best served when both sides of the house come to power if not in turn at least at sensible intervals.
The event which has impacted the markets this week is inflation. In China the factory gate prices rose by the fastest monthly rate for over three years, this was followed by the inflation figure in the USA rising to 4.2% year to date. Although the central banks have assured the market that they will not be rushing to increase rates, the investment community is not convinced, which has had a negative impact on markets around the world. In my view it seems unlikely that there will be much of a hike in rates if at all. I think the impact on muck of the promised “levelling up” promised by Blondie here and the promises that “Sleepy Joe” has made in the USA will put huge pressure on the Bank of England and the FED to resist or limit any rise.
So, to the markets