Last week brought some much-needed green to the markets after we’ve been accustomed to nothing but negativity as investors jumped back in hoping to find relief. However, caution needs to be exercised with the talk of a recession and defaults on debt looming over the global economy. Despite most consumers are preparing for a recession.
Further on the topic of sentiment, The US misery index is climbing once again as inflation and recession concerns take their toll on households. The rest of the world is feeling the same pain as declining home sales and raw material purchases are showing that wallets are finally behaving in line with consumer sentiment.
Last week also saw Boris Johnson resign and Shinzo Abe assassinated as well as a strengthening dollar, which for the first time in 40 years is now on par with the Euro. All of
this to say, despite the appearance of good deals in the market, we remain wary of deploying cash as we continue to monitor macro situations around the world. We are looking for options but are not aggressive yet, in the meantime we ask you to review your spending information in your client portal to ensure it is up to date in light of inflation.
• A booming dollar and quarter-trillion pile of distressed debt is threatening to drag developing countries into a cascade of defaults.
• The Fed’s rapid hikes to curb inflation are sparking a surge in the dollar, making it much harder for low-income nations to service foreign bonds.
• The number of emerging markets with distressed debt has more than doubled this year. Sri Lanka was first to stop paying foreign bondholders. Others could follow.
Finally, so long Boris Johnson. The UK PM resigned after a wave of cabinet resignations and a slew of calls for him to step down—including the chancellor he recently appointed. Johnson hopes to stay on as caretaker until October. But good luck guessing his replacement.