Right now markets don’t care
about anything. They’re satisfied that all risks are contained and are pursuing
the “trend is your friend” strategy that has dominated since the rise of Alan
Greenspan. Everyone now expects only a gentle rise in US interest rates and
wider risks only reinforce this assumption. As such, everyone is partying on
one side of the ship, drunk and rowdy, as the seas remain calm.
Last week a few ripples appeared on the horizon in the form of
restive US inflation. It appears to be a minor swell just now but the
implications are enormous if it builds so is definitely worthy of a closer
look. If this swell does build, and the US Federal Reserve is forced to
hike rate earlier than currently expected, about a year away, then markets will
rush to the other side of the ship. The results are predictable.
Click herefor the full article from Macrobusiness.