Tacit Thought

Tacit Thought Light Bulb Icon

Whither Markets?

August, 2022

It is often said that “markets go up on an escalator and come down in a lift.” Unquestionably it has been a very poor first half for financial markets. Some of the reasons are clear and obvious; others reflect a more subtle but rapidly changing economic environment, particularly with respect to inflation and a reversal […]

Tacit Thought Light Bulb Icon

Of Prosperity and Pachyderms

July, 2022

May we talk about the elephant in the room? In the course of British history, we have been invaded by the Romans, pillaged by the Vikings, and conquered by the French. Indeed, Norman French is still used during a Bill’s passage through Parliament and the Royal Assent, at least in part, is given in French. […]

Tacit Thought Light Bulb Icon

Looking for a Steady State

July, 2022

During the credit crisis of 2008 and the subsequent Euro crisis of 2010, we heard a lot about, “kicking the can down the road.” It was a familiar trope in the financial press at the time; policymakers had no real idea how to solve the problems that had presented themselves, and like the Dutch child […]

Tacit Thought Light Bulb Icon

Which is better, real, or nominal GDP?

July, 2022

A rise in nominal GDP makes you feel good, but only a rise in real GDP can make you wealthier. In a normal functioning economy prices change all the time. Some prices will rise but others will fall, leaving aggregate prices relatively unchanged. Fluctuating price is not inflation; it is only when prices in aggregate […]

Tacit Thought Light Bulb Icon

Markets are doing what they do, we must keep our focus

July, 2022

A market is made of a buyer and a seller. If a seller hears that their main competitor has just gone out of business, you could not blame them if they put up the price of a good in their shop as their customers now have less choice in the short term. Since late February […]

Tacit Thought Light Bulb Icon

The benefits and problems with QE

June, 2022

Much like the recent heatwave, Inflation has once again dominated the headlines as the latest inflation print in the UK breaks through recent records. Consequently, many pundits debate causes and offer solutions to central bank policy makers within developed economies. We feel it is important to remind readers of the origins of the inflationary surge […]

Tacit Thought Light Bulb Icon

Inflation: A Japanese Perspective

June, 2022

Many years ago, the influential economist, Paul Krugman, published a paper where he identified the emergence of a “liquidity trap” in Japan, a phenomenon that, post the Keynesian interpretation of the Great Depression, many economists’ thoughts were confined to the past. The experience of Japan over the last twenty years or so not only exploded […]

Tacit Thought Light Bulb Icon

Regime Change in Financial Markets – different, but still the same

May, 2022

Those of us of a certain age will remember the time in the 1970s when inflation both in the UK and the US was running at more than 20%. Recent inflation prints; +9% in the UK and +8.3% in the US in the year to April 30 echo those earlier difficult and stagflationary years. The […]

Tacit Thought Light Bulb Icon

Demographics

May, 2022

Demographics are deemed to be a driver of investment returns. The argument goes that the bigger the proportion of the population that is of a working age, the greater the economic value creation and the lower the drain on the public purse. These working people, then begin to save, providing a marginal buyer to equity […]

Tacit Thought Light Bulb Icon

Why do all roads lead to the US?

May, 2022

Recency bias is a cognitive bias that tends to place greater emphasis on more recent experiences and memories, even if they are not the most relevant or reliable. For investors this behavioural bias manifests itself all too often and can be challenging to avoid as more recent financial market events cloud judgement. It convinces us […]