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Issue 73 - Is The Inflation Genie Back In The Bottle At Last?

For the last two years, the one thing that seems to have dominated financial headlines more than anything else is the inflationary trend. This was misunderstood at an early stage by the central banks which led to very late activity with interest rate policies.

The knee-jerk reaction that then followed, saw interest rates rising on, an almost monthly basis, and some would argue that having reacted too late, the central banks are then being guilty of prolonging, the interest rate increase policy too long.

As always, it’s easy with the benefit of hindsight to look back and to identify errors of judgement, but it would seem that we are now going into the next stage, where once again, central banks will play a key role and their task from here and to use technical jargon, to manage a “soft landing” – and avoid a damaging recession.

One of five pledges made by Rishi Sunak was that he would halve inflation by the end of this year in the UK. At the time this was announced, it was fairly obvious that inflation would peak, and the trend would reverse, and there was much cynical comment in the press, that this was a political headline grabbing moment for something that was destined to happen in any event!

It would however seem that there are increasing number of indicators to suggest that we have indeed passed a pivotal point both in inflation and interest rate terms and the focus now has to be on managing the next steps.

As always, market makers are trying to anticipate several months ahead and will be making decisions that drive the markets accordingly. In fact, even though lumps and bumps remain, major markets have over the last 2 weeks or so, seen some positivity and the hope is that this will continue into the New Year and beyond.

Although, in theory, central banks have their autonomy, and should not be impacted by political influence, (whilst this may not happen directly), there will be pressures brought to bear behind the scenes I am sure. Particularly when you consider that the next 12 months will see a general election in the UK and a presidential election in the US. Both of these contests are likely to be hard-fought, and who knows what tactics we are likely to see unfolding on both sides of the Atlantic. For those who are not politically biased nor concerned about outcomes, this could be quite an entertaining 12 months or so!

Whilst I’ve said in the past, I do not have strong political views in any particular direction, I did make the mistake of thinking when Boris Johnson won such a significant majority four years ago, that this in itself should lead to a period of political stability that would enable the UK to really start to move forward – how wrong can you be?

Thanksgiving (and then Christmas) – a bad time for turkeys!

At the time of writing, I am in the US and this Thursday it will be Thanksgiving. This holiday tends to be celebrated as much ,if not more, than Christmas and the traditional Thanksgiving dinner includes either roast or deep-fried turkey.

It was a few years ago on a previous visit when we were discussing Thanksgiving traditions that we were introduced to the idea of deep-fried turkey. In fact, it would seem this is quite popular. The idea is to have a large vat of boiling oil which the turkey is lowered into and deep fried accordingly. Apparently, it does not take very long!

We said to the people telling us the story that this seemed a bit of a dangerous exercise, and they confirmed that there are many accidents each year, and even some fatalities as a result of this practice. However, they did go on to say that once you have tasted deep-fried turkey, you will never want it any other way! I have to say we resisted the temptation, and although we’ll be here for Thanksgiving, it will be barbecued steak for us!

One last Thanksgiving story, the Americans do like outdoor decorations and the one that we saw this week, I am sharing below, because it gave us a chuckle!

We will be back to the UK at the end of the month and then we start the countdown to Christmas with the staff party on December 2nd. We are going back to the South of England showground at Ardingly in Sussex, which is the venue we went to last year and it worked out very well.

We are able to join many other groups celebrating, with entertainment before and during dinner and then a disco for the more energetic to dance off the meal! I am just hoping that the jet-lag will not kick in and leave me snoozing at the table! (It hasn’t happened yet, but there is always a first time!)

As always, if we can assist in any way, please do let us know and we will keep in touch.

Best wishes from all at ABC.

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