War and long-term economics

Daily update

Near term, the rise in oil and gas prices are not yet economically threatening (they would need to stay high for longer). Dollar strength may be less about safety, and must partly reflect the need to buy more dollars to pay for oil, gas, or gold.
Investors are unclear about the US administration’s long-term aims in the war; statements from officials have contrasted. Economically, four long-term issues have already emerged. 1. Warfare and the associated risk is changing—drones and similar low-cost technology have an impact, magnified by the sensationalism of social media to change sentiment. 2. The fiscal cost to the US seems to be rising, with a need to replenish and probably expand specific weapon stockpiles.
3. The Gulf economies face new hurdles diversifying away from energy. A bad cycle of TikTok videos can undo months of tourism marketing. Expatriates often exhibit a herd mentality, and the nomadic wealthy are more inclined to move repeatedly. 4. If developed economy citizens who are (effectively) tax exiles call upon domestic taxpayer funds to be evacuated, should the obligation to pay tax be tied to citizenship, not domicile?
Data still matters. The UK February BRC shop price index displayed ongoing disinflation. February’s Euro area inflation data is expected to be benign.