By Michael Every of Rabobank
Rip-roaring nonsense
Brexit is still in the balance, with BoJo going to Brussels. Let’s see what sprouts.
The US election is also still *potentially* in the balance depending on: 1) if the Supreme Court acts after Justice Alito’s deadline of 9am Washington DC time today, and how if so….on which note Senator Ted Cruz appears set to argue for the Trump camp at any hearing; and 2) from a constitutional/bare-knuckle realpolitik perspective, how key state legislatures react before 6 January.
Moreover, US fiscal stimulus is still in the balance as once again no agreement can be struck on the key details.
However, aside from the odd day-to-day wobble, markets don’t really care. Consider this Moneyweek front cover: “Prepare your portfolio for a return of the Roaring ’20s”. It shows key policymakers such as Yellen about to enjoy the Charleston at a speak-easy, and argues “Don’t believe the pessimists. What with the end of lockdown and central bankers taking charge of government spending, party time is just around the corner.”
Really? I know markets like buy the rumour/sell the fact, but lockdowns are getting tighter in many places, not looser, and are likely to stay that way for months yet. Central banks are certainly speaking easy, and being easy with the old liquidity. Yet like curmudgeonly 1920’s US cops, and arguably of the Keystone variety, governments are NOT embracing huge fiscal stimulus policies even when they can do so. Most of the key political signals are that the desire is for a net rolling back of state support...