Monday 27, June 2022
Crunch!
Equity markets have fallen a long way, but they are still above trend. As an inveterate bear, I think we have further to go, but I can see why a lot of people are saying that we’ve turned the corner.
Inflation is running at 8% to 9% in the UK and USA. Interest rates are nowhere near that level, so we are in the territory of negative real rates. If salaries adjust to at least be static in real terms, I cannot see the need for a crash. Of course, labour is still very weak, politically, vis-à-vis capital so we may not see this rebalancing, which might well tip is into recession. Especially if governments crank up taxes as they become spooked by debt service costs.
Wrap
I’ve been on holiday, and now I’m back. From what I can see, today nothing much happened. The main news is that the G7 plan somehow to introduce a “price cap” on Russian oil. (I couldn’t see any mention of Russian gas.) How this works, I have no idea. I am deeply sceptical that the G7 can prevent willing buyers buying Russian oil at a price that meets their demand. It’s not as though the USA will fund oil production at a level to undercut Russia down to its production cost. Anyway, it seems to have had the effect of boosting the price of WTI crude, which is good for oil bulls like me.
Well, actually, not Twitter. Check out this post by the great Rudy Havenstein. The point he makes is that Epstein’s wealth was probably a result of blackmailing wealthy men who had a penchant for young girls. I suppose you might argue that blackmail is illegal, and so is entrapment, so the physical evidence seized from Epstein’s mansions should not be used to destroy the lives of Epstein’s victims, whether exploited girls or paedophile plutocrats. But nobody ever makes that argument. They just make it seem as though Ghislane procured hundreds of young girls for a single client.
I have no idea about whether this is pure conspiracy theory or not. It just smells fishy to me.
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