#Weekly #Review - Financial Markets & Economics: Commentaries by Fabian Wintersberger

While I was enjoying the Sun at Rhodos last week, I am really happy that I can write about actual market events again and am able to give you my thoughts about it.  There are several things I want to talk about: Firstly, there was the September meeting of the Federal Open Market Commitee, where markets expected to get some guidance about the future path of monetary policy ( Spoiler: They did not get much ) Secondly, there was a lot of talking about Evergrande. The Chinese property developer got into liquidity problems and as a result markets freaked out slightly at the beginning of the week. However, in retrospect it was only a brief downmove before everyone jumped on the bandwagon again and bought the dip.  However, I would like to start with THE topic of 2021, a topic that nearly has been forgotten in previous decades. You already know it, it is Inflation . Last week we got US-inflation numbers for August and a big sight of relief from the Tranisitory camp.  For the fir...

For the last several decades, one can observe a worrying trend when it comes to economic growth: All of those countries are experiencing a slowdown of growth. The 'good years' are getting worse and worse for quite a while now. While most observers point out that this tendency is vastly a result of structureal problems like high regulation, taxes, growing bureaucracy, demographics and debt, the slowdown in economic growth is accompanied by a continuing decrease in interest rates. Altough some people claim that the fall in interest rates has nothing to do with central bank policy and is due to other factors (recently,  some economists put the cart before the horse and claimed that it is because of rising inequality ), we cannot let central bank policy makers of the hook on that.  Nearly all schools of economic thought (at least the neoclassical and Keynesian mainstream) propose that, if the economy falls into recession, interest rates should be lowered (neoclassics) and governme...

The summer is over (at large), but the debate whether the current inflation numbers are a temporary phenomenon or if the price increases will become more permanent and the deflationary cycle ended in 2020. I wrote a little bit about the arguments of the Deflation Camp already back in July ,  and that one should always consider their arguments to evaluate the current economic conditions.  I know, I may repeat myself, but the two main arguments of the deflation camp  are that price increases have taken place in very special sectors of the economy, like rental cars, used cars, energy prices or plane tickets, just to name a few, and that we will only observe a substantial increase in inflation when wages pick up. ( addendum:  Although no one mentions that ' Over the past four quarters, the United States has generated more wage inflation than at any point over the past 40 years. ' ) A brief look into recent data shows that price inflation in those affected sectors ha...