The Lemon Fool

Fractured markets: the big threats to the financial system | FT Film:

https://www.youtube.com/watch?v=lFAQ0Euv724

Sobering.

Thx Geoff. I’m a subscriber and had seen this but I went back and watched again …

My reading of this is that there are many stress points in the world financial system (much/most around US Treasuries) and inflation is adding a great deal of pressure. Basically the era of low interest rates looks to have ended and inflation can no longer be assumed to be transitory.

So, the global economy is very stressed and some of the fracture points are of global significance. Given that I’m willing to accept that the risk of collapse has increased what am I to do? Stuffing £5 notes under the mattress will clearly not work … buy gilts or treasuries … buy corned beef and baked beans - I’m really at a loss.

Thanks again for the reminder that financial markets are (very) stressed.

Best wishes,

Steve

Steveam wrote:Given that I’m willing to accept that the risk of collapse has increased what am I to do? Stuffing £5 notes under the mattress will clearly not work … buy gilts or treasuries … buy corned beef and baked beans - I’m really at a loss.

I doubt whether there will be defaults on gilts or treasuries. I have got Treasury 0.125% IL 2009. Long duration clearly has risks. As they said in the film, be careful of derivatives. Stocks, corporate bonds? There is always risk. Stay away from anything racy. Hold tight. Cross your fingers. The game may still be getting less hammered than most people. It is only money. If you have lots of it, it does not matter. Sit back and watch the show.

It's a well produced piece, but TBH it's all a bit "after the fact" given that debt markets have probably already done most of the correcting they needed to do to bring them back into line with macro fundamentals.

These sort of docus always seem like they are prepping us for what is to come, but usually they turn into more of a contrarian sign. I remember a similar one by the BBC produced around a decade ago during the European debt crisis about how the world was rebalancing and the inevitable rise of China -- and then we had a US led tech boom instead.