There was another corker of an FT all-the-bases-covered headline yesterday: ‘Stocks rebound as anxiety subsides – Euro continues slide as fears for region’s banking system persist’.
So at last we can all be clear. The rule runs like this:
sliding currencies produce persisting fears
But within these apparently contradictory signals are some very clear signposts. Always pay more attention to signposts than signals: signals are often unauthorised, but signposts almost never are.
For example, the gold price last night stood at $1211 per ounce. It has been rising steadily – with ups and downs – for several weeks. The crude oil price was $71.37 – a steady fall, with ups and downs, for the best part of a month since its last high of $85.
Gold has some industrial uses, but its role is primarily one of safety in times of acute uncertainty. Oil, by contrast, is the best barometer we have of confidence in the future energy needs of a global economy.
These signposts say that people are scared, and output is expected to fall further.
Meanwhile, Osborne and Laws having parma-ham sliced £6.2 billion off the UK’s deficit, somehow the EU wants us to chip in £240 billion to the financial transactions levy. Sane people recognise this for the insouciant madness it is. They see it as a signpost marked ‘Surreal City’.
The trend will soon be more overwhelming than underlying. The correction is one of wealth as much as property prices or FTSE levels. The world is heading for a slump, and when it is over the wealth disparities between East and West will have shifted irreversibly. Perhaps, too, the disparity between the Hedge Fund manager and the Underclass mum will have narrowed more than anyone might imagine.
The Slog 