Monday 1, August 2022
Oil was a big loser today. The nearby month of the WTI future dropped by 4.7% to $93.9. Presumably, this was a delayed reaction to the negative GDP print last Friday. Whether or not the US is in recession is an arcane topic which is not for me to pronounce on, but clearly the economy is slowing, even though in nominal terms it’s still growing rapidly, and it has a very strong labour market. Oddly (to me) more distant maturities actually went up, presumably reflecting a shorter, sharper downturn.
Equity markets were practically flat, and bond yields edged down another couple of index points (5bp for 10Y US treasuries and the same maturity UK gilts).
Thought of the evening
Russia is sliding into fascism. There’s a good article in The Economist exploring this topic. I just wanted to say that the techniques of fascism: a sort of national resentment of slights, or wrongs suffered by a country by an ethnic group (invariably a minority), a class, a foreign power, a religion a distinct subgroup (such as immigrants or the bourgeoisie, or the rentier) is such a popular strategy for the ‘strong man’ governments of the world. Popular, because it works, and successful, because democracy gives rise to populist policies. Having a national focus of a party, Although we are a long way from fascism in the UK, we are surely creeping closer to it, at least in terms of the behaviour of the two biggest parties.
Fascism is a problem because it creates a pretext for hunting down enemies of the state, seditionists, protesters, public assembly, opposition parties, the monitoring of communications, controlling mass media (and social media), and cancelling or rigging elections.
Putin has gone down this slippery slope a very long way, and will never attempt a return to democracy. When he dies, or (less likely) hands over the reins of power, the new regime will not return Russia to any type of democracy. At the very best it will become a broken and decaying state, at the worst it will become more belligerent and willing to interfere in the democratic processes of other states.
I am sure the CIA is working hard on a plan to assassinate Putin, but — as John Boulton pointed out — it’s really quite hard work to pull this sort of thing off. And in Russia it will surely be next to impossible.
Sorry, no twitter or image today. I’m too tired.