New records on Wall Street, the best in China since the 2008 financial crisis, historic highs in Europe, recovery in base metals, to unimaginable heights in gold. The markets, in a coordinated explosion of excitement, said goodbye to September, which has traditionally been negative for stocks, with exceptions like this year. And the reasonable question is where are we going?
Driving force, interest rate cuts and young people’s outlook. But behind this there is an inexorable force that overshadows everything, an enormous debt, financed by enormous budgetary expenses, of course, by those who can. China launched a “bazooka” at its economy to make it reach the 5% target, contain capital outflows and deal with the crisis in the real estate market.
And that gave a boost to almost all asset classes, even in the darkest “corner” of real estate, the hybrid bonds of real estate companies, which returned even more than 100% this year.
Clearly, investors are actively taking on risk. Even as analysts call for preparing for the accumulated risks of anemic growth, US election uncertainty and geopolitical tensions, which could change the terms of the game.
The two candidates for the US elections carefully avoid the issue of the budget deficit, as their economic agenda is based on increased spending. The debt of the USA, more than 34 trillion dollars, and China, more than 45 trillion. dollars, far exceeds the value of the world’s two main economies. Global debt reaches 312 trillion. dollar
Debt numbers no longer matter. What matters is that they determine the cycles of the economy and markets and, essentially, the fate of all of us, without the political will to deal with it. As a result, we are all interconnected in global debt and the future crises it will create. And of course to the solutions “for our good” from the main authorities on the planet, which will continue to provide breathing space…
