Past the peak?
We wrote last week how we observe that – after the recent correction – stock markets now appear to have entered a consolidation phase, expressed by an unwillingness to rally despite daily announcements of exceptionally strong corporate profit growth. This reached an average annual rate of over 23% in the US this week. We concluded that this may well be because investors are finally coming to notice that global growth is no longer accelerating further and therefore the highest earnings growth levels may also be behind us. Whether this means that we are past the peak of this very long economic cycle and have entered a terminal downward slope or just experiencing yet another mini cycle within the much larger cycle cannot be determined at the moment. What is mostly consensus, however, is that there are no particular recession indicators on the horizon as there were at the end of 2015, which would point towards a mini cycle.
UK, EU and the “Customs partnership”
Eurosceptic Tory MPs have told Theresa May to ditch her government’s plan for a “new customs partnership” with the EU, suggesting it could cause the government to “collapse”. The Brexiteers in question, members of the pro-Leave European Research Group (ERG), are “not in the business of making threats”, according to their leader Jacob Rees-Mogg, but warned that the proposed model is “deeply flawed and would not take us out of the EU.”
Solar energy turns game changer
From an economic and investment perspective once thought of as little more than a pipe dream of liberal environmentalists – solar is gradually becoming a serious competitor to traditional fossil and nuclear based energy. As solar electricity generation costs are quietly falling to comparable levels 8 of those of fossil and nuclear fuel based production it seems only a matter of time until we witness a game changing moment in the global energy sector. Thanks to vastly improved economics, solar power is at least in Europe on the verge of permanently disrupting the energy mix in Europe, which may at the very least disrupt the energy sector, could possibly bring lower energy bills and would quite definitely reduce Europe’s energy dependency for supply from beyond its own shores.
Please click here for the full Tatton commentary.
