Global macro: Whose century? | Insight Investment

We live in a time of monsters. Everything appears to be mixed up, abnormal, a sort of hybrid, made up in weird ways. Be that Brexit Britain, where people are struggling to make sense of a new reality and digesting the consequences of a decision made long ago, or the United States, where society is deeply troubled, struggling with its sense of identity and how it can move forward cohesively. In this era, crisis follows crisis, from the shocking resurgence in inflation and macro financial turbulence of which the gilt market is a standout example, to the looming issue of political instability and our inability to fashion collective projects through democratic processes. It is living with the perpetual sense that you might be hit by a truck.

Key insights

• The pandemic highlighted how precarious the balancing act has become
  • GDP collapsed during the pandemic, triggering a gigantic monetary response
  • Surging inflation was met with the largest collective increase in interest rates in modern history
    
    
• The balancing act is most acute in Japan
  
  
• Financial repression may be one way to rebalance
  
  
• Tensions between the US and China are intensifying
  • The war of words is becoming more serious – An actual military confrontation is no longer out of the question
  • A new cold war will have consequences
  • The financial system is already segmented and highly political
    
    
• Climate change is a major destabilising force
  • Climate change is in Asia’s hands
  • The balance between energy security and climate change is highly differentiated
  • Africa is the future of humanity