The banalities of a central banker turn gold on the stock exchange

The banalities of a central banker turn gold on the stock exchange

If a central banker tells the obvious, he can move the markets and everyone is listening to him with fear.

If Tomasini tells you the same obviousness, he is grilled by his readers like a penny-monger.

This is the way the world goes and we can only take note of it.

After all, it is easier to become Tomasini than a central banker.

But the fact remains that what Jerome Powell said in Jackson Hole was the festival of platitudes that we are going to summarize:

1) Inflation is likely to remain: when prices at the beginning of 2022 jumped in a few months to almost 10% around the world, there were bamba analysts who showed graphs with the inflation peak on the last available data and therefore the bend of the curve which then collapsed bringing inflation back under control within a few months. The forecasts on the debt of the Italian Republic seem to be, which is always seen to return in the next 2 or 3 years and invariably continues to grow. So I tell you that inflation at 5-10% we will see it walking among us for the next at least 2 years. Amen.

2) If interest rates go up, unemployment goes up: we all know this

3) Inflation hurts and this especially for the poorer classes: inflation does not hurt, inflation is the killer of the lower-middle class that makes a living from rents and wages and coupons. It kills real estate owners (who in Italy except in Milan and Forte dei Marmi always lose money on capital), kills salaried and salaried workers, boils pensioners in the pot, stabs savers who continue to subscribe Bots and BTPs (psychiatry stuff but that’s the way it is, just read the newspapers of the last few weeks and no one calls 112 to give him a compulsory health treatment, this for me is a mystery of collective psychosis).

4) Central banks put the fight against inflation first: and I tell you that they put it in the first place because PRIMA inflation is subtle because nobody perceives its arrival (the ox people do not understand where it comes from and who is responsible if Putin or Covid or Mario Draghi) and for this reason the elites and governments like it but AFTER it upsets the social order and is one of the causes of the electoral upheavals in Western democracies.

Based on these factors, as if they were news, the markets collapsed last Friday and will most likely continue to do so tomorrow as well.

By now all the indicators point to a continuation of the slowdown where obviously by slowdown we mean what we had passed off as a recession but which recession does not seem to be in the end (the recession is decreed by a particular American office after months that it has occurred and therefore we do it little of the official statements).

The bets – report the financial media – against the SP500 and against the Italian debt are at their maximum or in any case they are growing rapidly.

But this is crap because the reality is that the financial markets had already discounted all this and we always find ourselves within the same fluctuation band, indeed right in the middle of the fluctuation bank so it is easy to predict that we will end up on the lows and as long as those lows hold up we cannot change the score of our forecasts (which are not really forecasts, we just observe what the strong hands do).

The gist of the matter is always the same for us “peripheral” Italians and I report the following graph that makes you think:

The green curve at the top is the GDP of the “peripheral” countries of Greece, Ireland, Portugal and Spain. As you can see, we lived in a bubble from 2000 to 2005 and then we woke up with the sovereign debt crisis and we plunged to a “zero point” level of growth for a good decade and then a little dead cat rebound and the crisis of COVID. We came out of the crisis with a nice fiscal doping and now we find ourselves exactly where we were 15 years ago at the “zero point”. The growth rate is long-term over 10 years and for this reason obviously it does not record the -4% of GDP in the covid and the + 5% after Covid but only the medium-term variation which always remains “zero point”.

In the lower section, however, we note the household debt as a percentage of disposable income: the peripheral “pigs” (including us) are green and the European average is dashed gray. As we can see, Italian families (not the State) are quickly recovering from debt since 2018 compared to the European average.

Let’s say that in the medium term above all the peripheral countries are reducing debt and therefore this reduces consumption and therefore this reduces economic activity.

The conclusion with the hoe and the shovel is that there is less and less interest in buying Italian shares and more and more interest in “escaping” from our financial market where boombastic actions can now be counted on the fingers of the hand.

During this imminent decline, as long as we do not know and I would wait to put the cart before the horse or to join the chorus of mourners who are already crying misery until at least as long as the period lows hold up, it will be good to buy US shares rather than Italian shares because really now we are as a country in a phase of deleveraging that is starting from families but that sooner or later will also touch the government.

Surely this Monday will not be a good day on the stock market.


#banalities #central #banker #turn #gold #stock #exchange

Leave a Comment

Your email address will not be published.