Daily update
Daily update
- Sadly, events in Ukraine are turning yesterday’s armchair virologist into today’s armchair military strategist. Speculation by traders, who have acquired just enough knowledge to convince themselves that they are the modern-day Alexander the Great, does not necessarily make for rational pricing of risk.
- The oil price will grab the headlines, although this is a reflection of risk pricing (neither supply nor demand has changed). Economically, the oil price today is irrelevant. The average oil price over the next three to six months is what will determine wealth transfers from oil buyers to oil sellers, and associated shifts in global spending patterns.
- The other economic issue is sanctions. Sanctions to date have been economically meaningless (and, obviously, politically ineffective). Increasing sanctions could be more economically disruptive. Importantly, this is the first European war with a real-time Twitter handle. The role of social media in shaping European, UK and US public reactions to the war could be a factor in determining the strength of sanctions applied by those governments.
- US initial and continuing claims numbers will get some attention. The US is revising Q4 GDP—financial markets pay less attention to data revisions than they should. There is a full pontification of global central bankers speaking.
