Worldwide Financial Planning

The benign market reaction is partly because the shutdown was foreseeable. At the start of the week many observers thought the shutdown would last a few days, but the consensus is now for two to four weeks.

A new Bank of England working paper confirms what many families already sensed: among all the inflation shocks, it’s food prices - the cost of bread, milk, pasta, which bites hardest today and cast the bleakest shadow on expectations for tomorrow.

Looking past short-term share price movements, Trump’s decision to charge up to $100,000 per application for skilled worker H-1B visas appears short sighted. A considerable portion of US productivity growth in the past few decades, as well most of the growth of US equities in the last three years, originates from US tech giants.

In economics the rival views between the mainstream and the heterodox (I’ll explain) of how inflation works aren’t just academic: they shape policies which ripple through mortgage rates, business costs, pay packets and savings.

This is the first time the Fed has cut rates this year but the cut was widely expected so reaction was muted. More significant is the dovish outlook from the Fed’s voting members, as most now see two further cuts this year. This caused some weakness in the US dollar and helped lift US equities.

Once you realise credit is created out of thin air, the key question becomes: where is that credit going? Is it financing new businesses, sustainable energy, better infrastructure? Or is it pouring into property speculation, driving up house prices and rents while doing little for productive capacity?