Markets are in limbo as people wash through the events of Wagner and Russia over the past few days.
The former Wagner leader has made it very clear he had no intentions of confronting President Putin. In his mind, he was making a point against the Russian military establishment. In the end though, the Russian Generals had what they were asking for and prompted all this in the first place, the absorption of the Wagner army into the regular army.
Subsequently, with the wreckage being removed there is nothing left to see and with very little if any impact going forward. The coup that wasn’t a coup was over in a flash. The impact for markets is similarly dissipating.
This left markets a little uncertain and distracted however, and so drift sideways they did.
Nevertheless, the run of data was damning. And seemed to get worse with each time zone yesterday.
Singapore Manufacturing contracted sharply yet again for the 8th consecutive month. If Singapore is in trouble, you know the world is slowing significantly.
The German IFO Business Climate Index continued to decline in what is already an area seen only during lockdowns and the GFC.
UK Retail Trade fell sharply for the second month with the CBI Index at -9.
Last and perhaps most significantly of all, the US Fed Dallas Manufacturing Index registered what could only be described as a depression shaped curve. The 12th month of sharp contraction.
And not to be outdone on the bad news front, US Natural Gas prices began to break higher. Rising sharply on the day, and now up 20% from their lows. Europe has signalled it is going to be another massive buyer of US gas this year. The impact on the US market and the Australian market too, will again be severe.
The upside out of all this dismal and worrying data, for some, was that old trotted out hope that this means interest rates will be cut. Of course they will not. We will just have a worsening economic environment with ever higher interest rates to make things even worse.
Western central bank group-think is badly misplaced in that it fails to identify the new and very different nuances of inflation today, relative to history. To use the old blunted hammer in the current epoch is an error and indeed a tragedy of the highest order.
The US, Europe and UK economies will continue to be mercilessly driven into the pavement. Destroying families, livelihoods and even large corporate level earnings.
Market commentary and analysis from Clifford Bennett, chief economist at ACY Securities
